The CEO of Circle appears surprisingly positive after Binance’s announcement a few days ago.
Allaire, CEO of Circle, believes the choice of Binance will benefit everyone
On 5 September, Binance announced that all of its users’ balances held in USDC, USDP and TUSD, will be automatically converted to BUSD.
#Binance to Auto-Convert $USDC, $USDP, $TUSD to #BUSD (Binance USD).
— Binance (@binance) September 5, 2022
This new and apparently controversial move will take effect on 29 September 2022 at 03:00 AM (UTC). However, there will not be any changes regarding deposits and withdrawals of the three stablecoins involved.
In fact, users will be able to continue to carry out these types of transactions with complete freedom. The only thing that will change will be their balances, which will all be denominated in BUSD with a conversion ratio of 1:1.
Strange as it may seem, this is precisely why Circle CEO Jeremy Allaire reacted positively to Binance’s choice:
Sharing some perspective on Binance forced conversion of USDC. Lots of misleading headlines and interpretations. Binance is not ending support for USDC, and change will likely lead to more USDC flowing to Binance. Here’s why. 1/
— Jeremy Allaire (@jerallaire) September 6, 2022
Allaire explains that this move will only bring a greater influx of USDC within the Binance ecosystem. He goes on to point out, that so far the announcement has only spread “misleading interpretations.”
On the surface, Binance’s decision could also be a gauntlet for competitor Coinbase, which along with Circle, is the founding member of Centre, an issuer of the stablecoin USD Coin (USDC).
Trading pairs removed
In addition, Binance has decided to remove the ability to trade the following pairs: USDC/BUSD, USDC/USDT, USDP/BUSD, USDP/USDT, TUSD/BUSD, and TUSD/USDT.
These will be removed as of 26 September 2022, 03:00 AM (UTC), and, as can be seen, they all involve the stablecoins affected by the statement.
Instead, as of 29 September 2022, 03:00 AM (UTC), trading will also cease on the following exchange pairs on the spot market, which deal with major crypto with a countervalue denominated in the stablecoins announced by Binance:
ADA/USDC, ATOM/USDC, AUD/USDC, BCH/USDC, BNB/USDC, BTC/USDC, BTTC/USDC, EOS/USDC, ETH/USDC, LINK/USDC, LTC/USDC, SOL/USDC, TRX/USDC, WIN/USDC, XRP/USDC, ZEC/USDC, BNB/USDP, BTC/USDP, ETH/USDP, ADA/TUSD, BNB/TUSD, BTC/TUSD, ETH/TUSD, TRX/TUSD, XRP/TUSD.
All of which is in favor of a greater possibility of growth in the volume of BUSD-denominated pairs.
Having said that, one must consider that Binance is the exchange with the highest trading volume in the world. So, it seems really strange and counterintuitive to see a glimmer of positive notes for “targeted” stablecoins, just as the CEO of Circle did.
BUSD’s run begins
Analyzing it from a broader perspective, with a long-term view, the initiative could also suggest that Binance is preparing to outclass Tether (USDT), currently the leading stablecoin in the entire market.
At the financial level, the introduction of automatic conversion to BUSD, aims to:
“[…] enhance liquidity and capital-efficiency for users […].”
The motives of the exchange giant are more than valid, although a few days ago, a Binance spokesperson reportedly told Cointelegraph:
“We have no plans to auto-convert USDT to BUSD for the time being, but that could change.”
The words could hint at some sort of intimidation for the world’s first stablecoin.
At the time of writing, Binance USD (BUSD) has a market capitalization of $19.7 billion, and is ranked sixth by CoinMarketCap.
It is actually still a long way behind USDC, which records a total market cap of $51.7 billion, thus gaining the fourth position.
Right behind, there is USDT in third position, which boasts a market capitalization of $67.5 billion. Moreover, Tether is the most traded token in the market, even more than Bitcoin. Currently, its daily volume is $49.5 billion, while BUSD’s is only $9.1 billion.
So there is still a long way to go for Binance, and if it really intends to make its stablecoin a benchmark for the entire industry, as USDT is now, it needs to work hard.
Probably, what was announced on 5 September could be an important and apt decision. For now, everyone is curious to see how BUSD’s numbers will react from 29 September onward.