Stablecoin issuer Binance to axe second-largest stablecoin USDC from its exchange
Binance will convert all USDC and rival stablecoin investments into Binance's native stablecoin.
Binance, the world's largest cryptocurrency by exchange volume has announced it will automatically convert customer funds in from stablecoin rivals like USD coin (USDC) to its Binance issued stablecoin Binance USD (BUSD).
On Monday, Binance said that it would introduce a 'BUSD Auto-Conversion' that would turn existing user balanced and new deposits of stablecoils USDC, pax dollar (USDP) and trueUSD(TUSD) into BUSD by 29 September.
Users will only be able to convert USDC, USDP, TUSD to BUSD at a 1:1 ratio during until the 29 September.
However, customers will still be able to withdraw money denominated in the banned stablecoin-rivals when removing funds from the Binance exchange platform.
The decision to axe rival stablecoins such as USDC comes amid Binance's ambitions to become the leading stablecoin issuer in the market.
What is interesting is that Binance have only cut the most regulated stablecoins from its platform, with USDC in particular going to the greatest lengths to remain compliant with regulators.
A Cirlce spokesperson, the parent company of USDC told AltFi: "While optimizing dollar liquidity on the world's largest exchange may carry benefits, the paradigm does raise potential market conduct questions."
However, the largest stablecoin Tether (USDT), who dominate 44 per cent of the stablecoin market, has not received the same treatment.
This comes despite USDT entangled in numerous affairs regarding the constitution of its stablecoin reserves.
USDT's market cap sits at $68bn, with USDC coming in second at $52bn. BUSD ranks third on the list of largest stablecoins with a market value of $19bn.
Stablecoins are crips that peg their price to an external asset to preserve their value. The most common peg is the US dollar, allowing crypto traders to keep their funds on decentralized ecosystems without having to convert their investments into fiat.
Integral to the blockchain and crypto ecosystem, stablecoin Terra collapsed in May, wiping $40bn from its market cap and causing $80bn in losses across crypto.
Since Terra's collapse, regulators across the globe have sought to bring them under their remit.
At present central banks are looking to launch central bank digital currencies (CBDCs), with the Digital FMI consortium led by the Boston Consulting Group aiming to launch a traditional finance-issued sterling-backed stablecoin in October.