India’s largest crypto exchange follows Binance on stablecoins

India’s largest crypto exchange follows Binance out of some dollar-pegged stablecoins, tilting the tables further against the BUSD token.

Driving the news: The exchange, WazirX, said on Monday it had already stopped taking new deposits in USDC, USDP and TUSD denominations – the dollar-pegged stablecoins of Circle, Paxos and True. And any existing deposits will soon be automatically converted to Binance’s namesake stablecoin.

Context: The move follows on the heels of Binance’s own decision to introduce a BUSD auto-conversion feature and reflects its rationale for removing competing stablecoins: to “increase liquidity and capital efficiency” for the benefit of customers.

The intrigue: Some people believe WazirX is actually a Binance-owned company, according to an acquisition announcement about two years ago.

• In August, however, Binance CEO Changpeng Zhao, or CZ, denied that the transaction was closed. The Indian exchange at the time was mired in a regulatory investigation that resulted in law enforcement freezing assets on the platform. (The exchange has since been restored.)
• “Binance does not control or operate WazirX,” according to Binance spokesperson Lily Lee. WazirX did not respond to requests for comment.

Details: USDC, USDP and TUSD spot market pairs will be delisted on WazirX on September 26, according to the company’s blog post.

• Withdrawals in that denomination before BUSD automatic conversion are supported until September 23.
• Customers can still withdraw stablecoins from WazirX in these three stablecoin denominations.
• Of note: WazirX customers appear to have received even less notice than Binance customers, who received the news in early September.

The big picture: Binance is the world’s largest crypto exchange, and while BUSD is now the third largest dollar-pegged stablecoin behind Tether’s USDT and Circle’s USDC, it appears to be closing in.

• Yes, but: Size also indicates large regulatory responsibility. (Read: scrutiny)

Between the lines: The public spat over who owns WazirX erupted on the heels of India’s National Police Directorate investigation into the exchange’s parent company, Zanmai Labs, for allegedly allowing money laundering on the platform.

• India’s regulators alleged that Zanmai Labs “created a web of deals with – Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore – to hide ownership of the crypto exchange,” following a search conducted on one of Zanmai’s directors.

Catch up quickly: CEO CZ last month denied the acquisition via chirping: “This transaction was never completed. Binance has never – at any time – owned any shares in Zanmai Labs, the entity that operates WazirX.”

• That prompted WazirX founder Nischal Shetty to do so push back on CZ’s claim.
• CZ subsequently admitted that Binance provides wallet services for WazirX, and control of WazirX’s domain was transferred under its control. He further opposed: “We can shut down WazirX. But we can’t, because… it hurts users.”

Meanwhile, Binance updated the WazirX acquisition announcement from November 2019, clarifying that the acquisition was only for “certain assets and intellectual property of WazirX.”

• Days after the spat and updated acquisition announcement, Binance removed the ability for users to make off-chain transfers between the exchange and WazirX.