The world’s largest digital asset exchange Binance has announced that all users’ holdings in three top stablecoins will be automatically converted to Binance’s own BUSD stablecoin as of September 29.
In a Monday statement, the Caymans-registered company said that “in order to enhance liquidity and capital-efficiency for users,” existing and new deposits of USD Coin (USDC), Pax Dollar (USDP) and TrueUSD (TUSD) will be swapped at a 1:1 ratio.
Although users will still be able to deposit and withdraw their funds in the denominated stablecoin of choice, trading balances on the Binance platform will be consolidated into one BUSD balance.
The bold move comes amid a number of fee reductions on the exchange as Binance ups its game against Coinbase (NASDAQ:COIN) and other competing exchanges.
As a point of clarification, neither USDS, TUSD or USDP will actually be delisted from the exchange, so it is unclear what the net impact on them will be.
On the contrary, it may actually help the affected stablecoins.
Circle’s co-founder and chief executive officer wrote on Twitter (NYSE:TWTR) that “Converged dollar books on Binance — now same as on FTX and Coinbase — is a good thing.
“USDC utility just increased.”
Helpful perspective from @wintermute_t , which is spot on. Converged dollar books on Binance — now same as on FTX and Coinbase — is a good thing. USDC utility just increased. https://t.co/QWfMx7f1cZ— Jeremy Allaire (@jerallaire) September 5, 2022
USDP is a notable inclusion in that issuer Paxos is the same entity that partnered with Binance to issue BUSD.
While USDP and TUSD are relatively small fry in stablecoin terms, USDC, which is issued by US-based company Circle, has a market capitalisation of nearly US$52bln, making it the fourth-largest cryptocurrency globally and second-largest stablecoin behind Tether.
The move from Binance could have consequences for Tether’s closest rival, though there is little chance of USDC ever matching USDT’s US$68bln market capitalisation.
Both stablecoins increased their market share in generally equal measures throughout 2022 so far.
Tether’s USDT stablecoin (left) comprises 6.7% of the total cryptocurrency market capitalisation, compared to Circle’s USDC (left) total of 5.1% – Source: messari.io
In the simplest of terms, the move represents a converged dollar book with numerous stablecoins consolidated into one for the purposes of trading on the Binance platform.
Binance has stated that it has no plans on auto converting the world’s largest stablecoin Tether.