Binance, the largest cryptocurrency exchange globally, has announced it will convert user balances and new stablecoin deposits in the form of USD Coin (USDC), Pax Dollar, and True USD into a stablecoin known as Binance USD (BUSD).
Binance to “Auto-convert” USDC
The move by Binance has been made to boost liquidity and capital efficiency for users on the exchange. Stablecoins are a type of cryptocurrency that traders use to facilitate cryptocurrency transactions.
Stablecoins are a form of digital currency created to sustain a constant value. For instance, USDC has a 1:1 dollar parity. These stablecoins play an essential role in the cryptocurrency market because they are less volatile than other cryptocurrency assets. Traders can store funds in the form of stablecoins during the bear market to escape volatility.
According to Binance, it would halt trading on spot pairs that include USDC, Pax Dollar, and True USD. However, users will still be able to withdraw funds through these stablecoins.
In the announcement, Binance said that the conversion of user holdings would happen on September 29. USDC is the stablecoin issued by Circle. It is also the second-largest stablecoin by market capitalization, which stands at $51.8 billion.
On the other hand, the Binance stablecoin (BUSD) has a market cap of $19.4 billion, making it one of the largest stablecoins in the market. With this change, several USDC products will be affected, including DeFi staking subscriptions, savings accounts, and cryptocurrency loans that will be shut down and liquidated on September 23.
The CEO of Circle, Jeremy Allaire, commented on the development, saying that the move had increased the utility of USDC. Allaire posted another tweet saying that he predicted the move would result in USDC and BUSD acquiring a larger market share and eating up the share of the largest stablecoin by market cap, Tether (USDT).
On September 6, 2022, the BUSD stablecoin reported trading volumes of $8.8 billion during the past 24 hours. On the other hand, USDC has had a trading volume of $7.1 billion during the past 24 hours. On the other hand, USDT is still dominating the stablecoin market and has a trading volume of $39.5 billion during the past 24 hours.
Binance news triggers mixed reactions
If the USDC stablecoin is no longer present on the largest cryptocurrency trading platform by trading volumes, the daily volumes of the asset could record notable changes. The news of the change has attracted mixed reactions from the cryptocurrency community.
Some members of the cryptocurrency community have opposed this move by Binance. However, others have upheld the decision and applauded the change. However, some have questioned the choices made by the exchange.
Several people have questioned why Binance has made the decision, asking why Binance was “deplatforming USDC.” Some users also insinuated that Binance’s status as the largest exchange and its dominance in the web 3.0 & crypto sector enabled it to do what it wanted.
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