Review event information
Late on Monday night (September 5), Binance, the largest global cryptocurrency exchange, announced that it plans to automatically convert its stablecoins (USDC, USDP, TUSD) into its own stablecoins. Binance is BUSD. According to Binance, this will be a move that will help improve the liquidity and efficiency of the use of capital on the exchange of users.
Starting September 29, Binance will automatically convert the stablecoins (USDC, USDP and TUSD) in users' accounts into BUSD. Binance Pay, the payment service of the Binance exchange, will also stop supporting these coins from September 12.
Currently, Binance is suspending all spot, futures and margin trading for these stablecoins. However, users can still withdraw the above stablecoins from the normal exchange.
A lot of questions are raised about a plan to take over Binance's public power. However, if you look at this issue from the perspective of Binance, indeed this plan will help the exchange's liquidity significantly improve.
BUSD is currently the 3rd largest stablecoin by market capitalization, and has been steadily increasing its position in stablecoin trading volume ever since Binance eliminated transaction fees for Bitcoin on its platform over the past summer
Some would argue that reducing the usability of USDC by the world's largest exchange would obviously benefit tether – over the past 1-2 years Circle has been ingrained in Tether's market share. But that is largely due to USDC's use in the decentralized finance sector and Tether's ongoing trust issues, not the volume of transactions on centralized exchanges.
As part of this move, Binance will also close access to USDC savings accounts, staking services, and Defi lending. But Circle CEO Jeremy Allaire thinks this action of Binance is a good thing, Binance has now followed the same path as FTX and Coinbase are doing. And this in fact only increases the utility of USDC. The simplest example is that you can still deposit and withdraw USDC seamlessly to/from binance. Before this change, you need to convert it to BUSD/USDT and then use it to trade futures contracts.
In the personal opinion of the writer, it is highly likely that this could be an action towards the monopoly of Binance, those who use the Binance ecosystem will have to use all of Binance's products and services. An easy-to-understand comparison is that Vingroup is orienting its customers to use all services in its ecosystem, staying in Vinhomes, riding a Vinfast, checking up in Vinmec, children studying at Vinschool.
Binance has reason to increase the utility of its BUSD stablecoin, issued by Paxos, but it will still cut USDC trading volume. If Binance's trading volume reports are accurate, the exchange will outperform its competitors.