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Binance will convert users’ USDC into its own stablecoin

The largest crypto exchange by volume, Binance will start converting any existing user balances and new deposits of USD coin (USDC), pax dollar (USDP) and true USD (TUSD) into the company’s own stablecoin, according to a statement published on Monday. The conversion is scheduled to begin on 29 September. USDC, issued by Circle Internet Financial, is the second-ranked stablecoin after Tether, with a market value of nearly $52-billion, according to data from CoinGecko. Binance’s stablecoin, BUSD, is a distant third at around $19.3-billion.

The decision “is quite bold and unprecedented”, said Hagen Rooke, a partner at law firm Reed Smith LLP in Singapore. “Commercially it is a smart move for Binance because its service offering will now increasingly converge around its house-own BUSD product.” He added that users likely won’t be left “materially out of pocket” since the stablecoins involved are all intended to be pegged to the dollar. However, the conversion may annoy users wishing to use their third-party stablecoins like USDC on applications which specifically support them, like for yield generation on a decentralised protocol, Rooke said.

The exchange said the move is intended to “enhance liquidity and capital-efficiency for users”. Binance will also remove and stop any trading on spot pairs that involve USDC, USDP or TUSD, the exchange said. The top three stablecoins – Tether’s USDT, as well as USDC and BUSD – were all trading around $1 as of 9.53am in Singapore on Tuesday, according to data from CoinGecko. Current Binance-offered USDC products affected include crypto loans, which will be closed and liquidated as of 29 September; USDC-denominated savings accounts; DeFi staking; and the USDC/USDT liquidity pool. Circle did not immediately return a request to comment on the Binance announcement. Binance had no immediate comment beyond the statement.

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