Binance announced that from September 29, USDC, USDP and TUSD stablecoins balances on their platform will be automatically converted into the exchange’s own stablecoin — BUSD. Withdrawals can still be made in any of those.
To date, Binance is the most popular crypto exchange and occupies first place in the rating of exchanges from CoinMarketCap. Binance is actively used by 90 million users from all over the world and the volume of daily trading on the exchange is around 76 billion dollars.
Recently, the exchange announced its plans to convert a number of stablecoins into its own stable coin, BUSD, to help users make higher liquidity and capital efficiency.
“In order to enhance liquidity and capital-efficiency for users, Binance is introducing BUSD Auto- Conversion for users’ existing balances and new deposits of USDC, USDP and TUSD stablecoins at a 1:1 ratio. With effect from 2022–09–29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance Platform that reflects their balances of these four stablecoins (BUSD, USDC, USDP and TUSD) post conversion.”
The exchange also reported that users can independently convert their funds to BUSD without waiting for automatic conversion. However, Binance will allow users to withdraw their funds in USDC, USDP and TUSD, but all funds in the accounts will be denominated in BUSD by the deadline.
Among the stablecoins that were included in the list of automatic conversion, there is the well-known USD Coin, whose market capitalization according to CoinMarketCap is $50,813,033,795. USDC is the second largest stablecoin by market capitalization, while BUSD from Binance has a market capitalization of only $20,512,112,022. Binance clarified that the list of stablecoins that will be automatically converted may change.
The decision to convert stablecoins from other companies into their own will not be universally approved by the crypto community, so people are divided into two groups. Some accuse Binance of monopolizing the crypto market and trying to eliminate competitors.
And others support Binance. For example, the CEO of Wintermute shared his thoughts on this topic on Twitter and noted that the innovation will have positive consequences both for users and for the stablecoins that will be converted.
It is worth noting that the representatives of USD Coin are also pleased with this policy. Circle co-founder Jeremy Allaire tweeted about the positive impact of converting USDC to BUSD.
Not only USDC supported Binance. Representatives of all stablecoins, which are now subject to automatic conversion to BUSD, spoke about the innovation in a positive way. The Paxos company, which owns the USDP stablecoin, assumes that this step is a way to ensure the safety of users.
Who is right? Only time will tell how this transformation will affect stablecoins. And we will continue to observe and share with you the most interesting events.
UPD (21/09/2022)
Following the Binance path, WazirX, one of the major Indian crypto exchanges, has stopped deposits of USDC, USDP, and TUSD. As the company stated in a blog post, “WazirX will implement BUSD Auto-Conversion for users' existing balances of USDC, USDP, and TUSD stablecoins at a 1:1 ratio to enhance liquidity and capital efficiency for users”.
This announcement sounds quite surprising after a ridiculous twitter battle between Binance CEO Changpeng Zhao and one of WazirX founders Nischal Shetty over the fact whether Binance owns WazirX or not. No clear answer was found… Seems that this announcement gives us a kind of a hint who was right back then.
