Binance Drops Support for Market-Leading Stablecoin USDC

  • Binance (BNB-USD) is dropping support for USD Coin (USDC-USD) on its exchange.
  • The exchange will be automatically converting USDC holdings into Binance USD (BUSD-USD).
  • Notably, the company is maintaing support for close competitor Tether (USDT-USD) however.
The Binance logo on a smartphone with a neon chart in the background.
Source: Grey82 / Shutterstock.com

It would be an unusual week if Binance (BNB-USDwasn’t making some of the biggest crypto news. The exchange is a monolithic force within the crypto market and its CEO, Changpeng Zhao, is among the most notable figures in the crypto movement. A listing on the Binance exchange is a game-changer for any project. On the other hand, a de-listing can be a project killer. This week, the exchange is making headlines as it drops one of the world’s most prominent — and transparent — stablecoins.

USD Coin (USDC-USD) is the product of crypto payments company Circle and managed in part by Coinbase (NASDAQ:COIN). The crypto is the second-largest stablecoin in the world. The project also bears a market capitalization of nearly $52 billion, making it the fourth-largest crypto in the world. But what’s particularly appealing about USDC is that it’s one of the most transparent and worry-free stablecoins on the market.

The entire stablecoin asset class has been pretty controversial in recent months. The collapse of the Terra (LUNC-USD) network can be chalked up almost entirely to the network’s stablecoin de-pegging. That event has since prompted a discussion about algorithmic stablecoins and why they need a reserve backing. It has also opened the door for conversations about reserve transparency.

USDC is and always has been wholly transparent about its reserves. Circle releases attestation reports every month to share exactly what assets back USDC. This is one of the reasons for USDC’s market dominance. The transparency has also helped USDC dominate exchanges. In just the past 24 hours, over $7.6 billion in USDC has been swapped. But apparently, Binance no longer has interest in contributing to the high-volume stablecoin.

Binance Drops Support for USDC, Two Other Stablecoins

This morning, Binance announced plans to drop USDC support on its platform, alongside two other smaller stablecoin projects. The exchange explains that the move is to “enhance liquidity and capital-efficiency for users.” Existing balances and deposits of USDC on Binance will automatically be converted to its native stablecoin, Binance USD (BUSD-USD). Binance will also reconsolidate USDC with the other two stablecoins into a single trading pair.

This move comes as quite a surprise of course, given USD Coin’s stature as one of the most popular of its kind. And, while Binance is losing out on some of its most popular trading pairs, USDC is being hit hard by the news as well. However, it does make sense; Binance is obviously looking to further the reach of its own stablecoin.

What makes less sense, however, is the exchange’s decision to keep Tether (USDT-USD) through this move. The company tells Cointelegraph that, as of right now, it has no plans to also auto-convert Tether into BUSD.

While it is the largest stablecoin in the world — with a market cap of almost $68 billion — Tether does not come without controversy. New York completely banned the trading of USDT after discovering its parent company had been lying about sizable financial losses to investors. Moreover, Tether is far less transparent than USDC regarding its reserves, only beginning to release its own attestation reports after it was found to have been underlying its reserves with unsecured promissory notes.

Binance says that, while it does not plan to auto-convert Tether right now, that plan “may change” in the future.

On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.


Article printed from InvestorPlace Media, https://investorplace.com/2022/09/binance-drops-support-for-market-leading-stablecoin-usdc/.

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