Circle Reacts To Binance Move to Stop Support for USD Coin (USDC): Details

On September 5, Binance, the world’s largest blockchain ecosystem and leading digital assets exchange by trading volume, said it will implement a 1:1 auto-conversion of USDC, USDP, TUSD to BUSD (Binance USD) at 2022-09-29 03:00 (UTC).

In a Monday statement, Binance, who is also the issuer of BUSD, the third-largest stablecoin said that it is aiming to enhance liquidity and capital efficiency for users. Ultimately, all USDC-related operations across all markets on the exchange will be disabled. 

Part of the announcement wrote;

“In order to enhance 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. 

“With effect from 2022-09-29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance Platform that reflects their balances of these four stablecoins (BUSD, USDC, USDP, and TUSD) post-conversion.

“This will not affect users’ choice of withdrawal: users will continue to be able to withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance.” 

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A Stablecoin War? Circle Reacts

The USD Coin (USDC) stablecoin is issued by Centre, a consortium founded by Circle and Coinbase. Commonly known as the digital dollar, USDC has grown to become the second-largest stablecoin by market capitalization and 24 hours trading volume.

The fiat-collateralized stablecoin has also gained a wider adoption from investors as it adopts a more trusted design. 

Although Binance has justified its planned move on USDC, the news has caused a stir in the crypto space. Particularly, Circle company has raised concerns about Binance’s decision to cease support for USDC. 

In response to the impending development, Circle’s spokesperson noted that although the move may be beneficial, it somewhat shows a market conduct inadequacy. 

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According to Forkast, a representative of Circle wrote in an email, “Based on market activity, it would seem much of this transition has already passed and while optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”

It is worth noting that USDC ranks higher than Binance’s BUSD in terms of market capitalization and 24 hours trading volume. Per data from Coinmarketcap, USD Coin has a market value of approximately $51.67 billion at the time of writing. While BUSD’s market cap is approximately $19.63 billion.

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