With its announcement that it will automatically transfer users’ funds from alternatives like USD Coin (USDC) to its Binance USD (BUSD) token, Binance, the largest cryptocurrency exchange in the world, has upended the stablecoin market into mayhem.
On Monday, Binance announced that starting on September 29, it will automatically convert all investments in USDC, Pax Dollar (USDP), and TrueUSD (TUSD) into BUSD.
Customers transferring these tokens to the exchange will have their funds instantly converted on that day into Binance’s stablecoin. However, while taking money out of Binance, users will be able to do it in USDC, USDP, or TUSD at a 1:1 ratio to their BUSD-denominated account balance.
Read More: What caused crypto exchange platform Vauld to suspend withdrawals?
According to the exchange, the step is meant to “improve users’ access to money and liquidity.” In actuality, the move essentially subdues USDC, the second-largest stablecoin, from one of the most prominent positions in cryptocurrency, creating a barrier to it overtaking Tether (USDT) as the largest one. The impacted USDC products will be terminated and liquidated on September 23 and include savings accounts, DeFi staking subscriptions, and crypto loans.
According to estimates, USDC, issued by Circle Internet Financial, is the second-ranked stablecoin behind Tether, with a market value of close to US$52 billion. BUSD, a stablecoin from Binance, comes in third place with over US$19.3 billion. The leading stablecoin, USDT, has a market value of US$68 billion.
The unexpected decision comes as Binance undercuts Coinbase, a competitor exchange, in order to compete with it on pricing.
