Binance to convert users’ USDC into its own Stablecoin
Binance cryptocurrency exchange announced on Monday that it has introduced “BUSD Auto-Conversion”.
The latest program will therefore allow customers to convert existing user balances and new deposits of four stablecoins such as USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD), into their own native stablecoin BUSD, effectively delisting trading with the three rival stablecoins.
The company revealed the reason behind the move: “To improve liquidity and capital efficiency for users, Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP and TUSD stablecoins at a 1:1 ratio.”
Binance further said that it will remove and stop all trading on spot pairs, including USDC, USDP and TUSD.
The conversion is scheduled to start on September 29. “Effective from 2022-09-29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance platform that reflects their balances on these four stablecoins (BUSD, USDC, USDP and TUSD) after conversion “.
USDC is the second largest stablecoin with a market capitalization of $51 billion, according to CoinMarketCap. Binance’s BUSD stablecoin comes in third, with a market cap of $19 billion, while USDP and TUSD are far smaller.
The move will effectively remove direct custody of USDC, USDP and TUSD for Binance’s 120 million users worldwide.
However, the firm said the move will not affect users’ choice of withdrawals. “Users will continue to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance”, the company explained.
The exchange said customers will be able to see the converted balance in their accounts within 24 hours. And further said that the minimum amount for manual conversion is 1 USDC, USDP or TUSD while accounts with lower balance are automatically converted to BUSD.
Binance also said it may expand or change the list of stablecoins eligible for automatic conversion.
The exchange further said it will remove support for USDC, USDP and TUSD products, including spot trading, futures and margin lending.
USDC products affected include crypto loans, savings accounts and DeFi staking subscriptions, which will be closed and discontinued on September 23.
The news is met with some skepticism, as some users have blamed the decision to convert rival stablecoins into the Binance stablecoin.
“Crypto monopoly 101, Binance will remove $USDC as a tradable asset by September 25 to pressure their $BUSD.” a Twitter user named ‘@BloodgoodBTC’ so.
A spokesperson for Circle also commented on the development: “Based on market activity, it appears that much of this transition has already passed, and while optimizing dollar liquidity on the world’s largest exchange may have benefits, the paradigm raises potential market behavior questions.”
Tether (USDT), the largest stablecoin that has a market capitalization of $68 billion, will remain available on the Binance platform.
Stablecoins, a newer type of cryptocurrency, are gaining popularity for their commitment to minimizing the price volatility that has limited the use of Bitcoin and other digital assets as a medium of exchange.
Since Tether (USDT) launched in 2014 as the first stablecoin, the list has grown to include the likes of USD Coin (USDC), Dai (DAI), True USD (USDT), Binance USD (BUSD), Paxos Standard, Digix Gold, Havvens Nomin i.a.
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