– Binance wants its customers to transact in Binance USD (BUSD), the third-largest stablecoin in circulation, to the detriment of its larger peers Circle’s USDC, No. 2, and Tether’s USDT, No. 1.
– Binance on Monday said it will automatically convert customers’ dollar-pegged stablecoins like USDC, Paxos’ paxdollar (USDP) and trueUSD (TUSD) into Binance USD (BUSD), effectively delisting competing coins on the exchange.
– Starting Sept. 29, existing USDC, USDP and TUSD balances in user accounts will be automatically be converted, associated trading pairs such as BTC/USDC, for example, will also cease to trade and any staking on those assets will also be discontinued.
– Binance’s forced conversion of customer assets consolidates power in the ranks, with BUSD and USDC combined market capitalizations of $71.3 billion just exceeding USDT’s $67.5 billion.
– In effect the fiat-backed stablecoin market is a three-horse race, with market share almost evenly split between Tether and now Binance/Circle, per data compiled by The Block.
– Crystal’s thought bubble: Remember Disney Dollars? Disney offered customers a 1:1 equivalent to U.S. dollars underwritten by Scrooge McDuck to spend on merch and food within its theme parks. There isn’t anything truly nefarious about Binance wanting its customers to transact in BUSD in its own ecosystem in the same way.
– Circle CEO Jeremy Allaire on Tuesday tweeted: “Given how limited BUSD usage is outside of Binance, this will likely benefit USDC usage as the preferred cross CEX and DEX stablecoin rail.”
– Circle stands to see a loss in revenue as a big chunk of the USDC balances will be converted to BUSD. (USDC in circulation has already dropped about 5% in the last 30 days, while BUSD’s has climbed by 11%, according to data compiled by CoinGecko.)
– Evgeny Gaevoy, chief of leading market maker Wintermute, tweeted that the move is a net positive for liquidity, because trading wouldn’t be split between a number of dollar-backed stablecoins, but also a net negative for Tether and Circle.