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Binance, Issuer of Third-Biggest Stablecoin, to Stop Supporting Larger Rival USDC
The action effectively removes the world's second-biggest stablecoin, USD coin, as a tradable asset on Binance's giant platform.
Updated May 11, 2023, 4:23 p.m. Published Sep 5, 2022, 5:33 p.m.
Binance, the world's largest cryptocurrency exchange by volume, has shaken up the vital stablecoin market, announcing it will automatically move customers' funds to its Binance USD (BUSD) stablecoin from alternatives, including the larger USD coin (USDC).
Binance said on Monday that it will convert all investments in USDC, pax dollar (USDP) and trueUSD (TUSD) into BUSD on Sept. 29, and customers transferring those tokens to the exchange will see them automatically converted into Binance's stablecoin after that date. However, customers will be able to withdraw money denominated in USDC, USDP or TUSD when removing money from Binance.
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The decision effectively banishes the second-largest stablecoin, USDC, from one of the most prominent perches in crypto, erecting an obstacle to overtaking tether as the biggest one. USDT's $68 billion market value leads USDC's $52 billion, while BUSD is in third place at $19 billion. USDP and TUSD are far smaller.
Read more: What's the Point of Stablecoins? Understanding Why They Exist
The surprise move comes as Binance goes after another exchange rival, Coinbase (COIN), by undercutting it on price.
Stablecoins are part of the crypto market's foundation, serving as digital substitutes for the U.S. dollar or other fiat currencies. "Stable" comes from the fact that their price is pegged to a conventional currency or other type of asset such as gold. Each token tied to the dollar, for instance, is always supposed to fetch almost exactly $1, though the quality of the assets backing a stablecoin can influence how far the price strays.
The business is dominated by USDT's 44% market share.
Read more: Morgan Stanley Says Stablecoin Market Cap Is Contracting Again
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