Stablecoin Markets Shift With Binance Launching USDC Conversions

Binance has begun the conversion of TrueUSD, Paxos’ Pax Dollar and Circle’s USDC holdings into its own stablecoin, Binance USD (BUSD) and the stablecoin markets are already feeling the impact of this move.

Since Binance announced that it would no longer offer support for competing stablecoins on its platform, which is the largest exchange in the world in trading volume, the market cap of the USDC stablecoin has declined by 5%.

Moreover, there has also been a rise of 93% in the outflows of the USDC stablecoin from the exchange, which means the number of stablecoins that have left the exchange.

More numbers

Nansen, the blockchain analytics firm, said that as of Wednesday afternoon, the total value of stablecoins on the Binance exchange was $26 billion.

Out of this figure, the total value of BUSD stablecoins is $20 billion, with the rest of the figure in competing stablecoins.

This includes the USDP stablecoin worth $48 million, the USDC stablecoin worth $683 million and TUSD worth $283 million.

The only other stablecoin that had a sizable balance on the Binance exchange was that of Tether (USDT), which was approximately $5 billion.

The conversion

From Monday, users were able to convert their stablecoin balances into BUSD at a ratio of 1:1, but from Thursday onwards, all available balances of USDP, USDC and TUSD would be converted automatically into BUSD.

Even though the announcement from Binance was about three competing stablecoins, most people have focused on USDC.

It is considered the second-largest stablecoin in terms of market capitalization. This conversion is certainly having an impact on the stablecoin landscape.

There was a lot of agita when the move was announced by Binance at the beginning of the month. This is primarily because it is the largest crypto exchange where trading volumes are concerned.

The total trading volume of transactions conducted on Tuesday was worth $23 billion.

Some people called it a crypto monopoly and said that Binance was deleting competitors the same way that Google had done a decade ago.

The implications

Meanwhile, some critics were of the opinion that this would increase BUSD issuances and show a decline in USDC issuance.

As both these stablecoins are pegged to the US dollar in a 1:1 ratio and both Circle and Paxos burn coins when they are redeemed, it is possible to calculate their approximate market capitalization.

After the announcement of Binance, the market cap of USD has decided to be $49 billion from earlier this month.

In the same time period, BUSD has seen its market cap go up by 8% to reach $21 billion. The CEOs of both Binance and Circle have said that auto-conversions do not mean a delisting of USDC.

Changpeng Zhao, Binance’s CEO said that users would still be able to deposit and withdraw USDC from the exchange. He said that users can get the lowest slippage and best prices.

Jeremy Allaire, Circle’s CEO, said that Binance’s move would actually increase the flow of USDC to the exchange.

By Brandon Craig
No widgets found. Go to Widget page and add the widget in Offcanvas Sidebar Widget Area.