Binance will Auto-convert USDC, USDP and TUSD balances to Binance-USD (BUSD)
Binance will remove spot, future and margin trading with USDC, USDP and TUSD pairs. Only Deposits and Withdrawals remain active.
Experimenting with different times for email and newsletter delivery this week, hence the delayed email today. I apologize for the inconvenience.
Binance, one of the world’s largest crypto exchanges by trading volume announced that existing USDC, USDP and TUSD balances in user accounts will be automatically converted to BUSD (Binance USD) on Sep 29, 03:00 (UTC) at a 1:1 ratio. Users can also choose to convert it manually before that. All trading pairs and other functions with the three stablecoins, in spot, contract, leverage, payment, and lending, will be removed. The only exception is that users can deposit and withdraw these stablecoins.
Is this so that Binance can promote BUSD which is the third largest stablecoin today, or just a routine “Merging liquidity for efficiency” move as the exchange suggests?
Let’s dig in.
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Businesses have to be Competitive
Kucoin doesn’t support BSC tokens. Binance doesn’t support Kucoin or OKX’s chain. Businesses around crypto and web3 are definitely competitive and here to grow. hence when the news broke today that Binance is going to delist some of the other stablecoins, a debate spurred on why would Binance do that.
Users will still be able to deposit and withdraw the stablecoins USDP, USDC and TUSD, but their balances will immediately convert to BUSD on deposit and their BUSD balances will be reduced upon withdrawal to any of these stablecoins.
This isn’t much of a big deal honestly as FTX also buckets all stablecoins except USDT (Tether) as USD on their exchange. Binance is doing something similar with BUSD. Binance owns BUSD - it is literally called Binance USD and the stablecoin is issued in a partnership with Paxos.
Mike Dudas, creator of The Block Crypto, linksDAO, also a regular critic of Binance, tweeted about how centralized businesses compete to win.
The Tether Immunity
Almost always USDT or Tether enjoys immunity from delisting from any exchanges. It is currently the largest stablecoin however constantly surrounded by controversy. People get fired for years-old tweets and then we have Tether, which is standing strong despite so many platforms trying to prove that it is backed by very little real money and much like FED, it is printing money without any underlying assets. At the time of this writing Tether’s circulating supply is around 68 Billion.
For years now Tether has promised an audit of its assets but it hasn’t happened yet. On the contrary, USDC is a stablecoin issued by a regulated entity in the United States, with proper audits and it gets de-platformed just like that.
Even exchanges like FTX keep Tether separate from other USD-based stablecoins. Tether enjoys its privilege and it is also believed that its unaudited printing was the reason for the 2020 Bitcoin Bull market.
DAI, another stablecoin by MakerDAO will continue to remain listed on the exchange.
CZ, the CEO of Binance tweeted that this exercise is to merge liquidity. Will DAI and others be removed in phase 2? CZ also said this is not delisting as the deposits and withdrawals for the stablecoins remain active.
The battle of the stables
While we talk about decentralization, it was made evident by a tweet that today, running your email server is suicide for the business. The emails sent from your side are almost certainly hitting the spam folders of the recipient if you do not use an email provider and pay for the service. I have been informed that these newsletters are also hitting people’s promotions tab sometimes (make sure you drag them to your inbox).
Google and a few other players take the lead here.
A similar consolidation is coming to Stablecoins, or rather a fight may be breaking for the top spots. Last month, AaveDAO approved the creation of GHO, a stablecoin. Curve Finance is also set to launch its stablecoin in a month.
So it makes sense for Binance to try and retain the top 3rd spot by merging liquidities of other stablecoins in BUSD. In a few years when commerce will happen in a Dollar denominated crypto, Binance and other major exchanges may act as the layer of payment and would want their systems adopted by the majority. It is, after all, a good business strategy.
The question we must ask ourselves is with all the decentralization debate if exchanges and exchange-issued stablecoins take precedent, in this case, Bitfinex & Tether issued USDT, Circle issued USDC or Binance issued BUSD, then how long until we have to throw in the towel and say, screw it, I will have to use a centralized system for payment now?
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