The world’s largest crypto exchange announced yesterday it would cease trading support for USDC and auto-covert deposits to its own stablecoin after Sept 29.
According to a new Twitter post, Jeremy Allaire, co-founder and CEO of USD Coin (USDC) stablecoin issuer Circle, said that the recent decision by Binance to merge stablecoin dollar books is “a good thing” for USDC. “This move would lead to a gradual net share shift from USDT to BUSD and USDC,” said Allaire.
The day before, Binance announced it would cease trading support for USDC and auto-convert deposits after Sept. 29 to a consolidated Binance USD balance comprising other stablecoins pegged to the U.S. dollar. Users will be able to withdraw individual constituents from the consolidated balance at par value.
Some users pointed out that it’s now possible to deposit and withdraw USDC seamlessly in Binance. Before the change, it was required to first convert USDC to BUSD or USDT and then use it to trade leveraged products. Therefore, the overall liquidity of USDC would increase.
However, others pointed out that the automatic conversion could potentially result in greater redemption of USDC to mint more BUSD. According to Nansen, USDC held by Binance has decreased to less than 1 billion from 2.5 billion in July. Meanwhile, the exchange holds around 5 billion USDT.
Data from Dune Analytics suggest that USDC is currently the second-most popular stablecoin in the world, accounting for 33.5% of transactions in the category. It has been gaining in market share since two years prior. Tether is currently the most widely-used stablecoin, with a market share of 50.3%. Meanwhile, Binance USD sits in third place with 15.1%.