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Binance to stop supporting USDC; Will convert existing tokens to BUSD

Binance announced on Monday that it will convert all existing investments in USDC, Pax Dollar (USDP) and TrueUSD (TUSD) into BUSD or Binance’s native stablecoin starting September 29. Users on the platform will be able to withdraw money denominated in USDC, USDP or TUSD.

The coins will be converted in a 1:1 ratio and can be withdrawn in the user’s choice of stablecoin for the same. As part of the announcement, the trading platform will also remove spot, future and margin trading with the three stablecoin pairs. 

The world’s largest crypto trading platform claims that this is being done to “enhance liquidity and capital efficiency” for users. The move essentially removes the world’s second-largest stablecoin from the exchange in favour of the third-largest stablecoin, BUSD made by Binance itself. 

Can cryptocurrency replace fiat currency? Why does its value change?

USDC currently has a market cap of over $50 billion. In comparison, Binance’s BUSD only maxes out at $19.4 billion, after a 0.12% growth at the time of writing. Its daily trade volume however has already jumped 64.96% at the time of writing according to CoinMarketCap. Stablecoins are currently dominated by USDT with a 44% market share and $68 billion market value. 

Stablecoins are an important part of the crypto market as they act as digital substitutes for the US dollar or other fiat currencies. The price of each stablecoin is pegged to a conventional currency making them ‘stable’. For example, each token tied to the US dollar is almost always supposed to fetch $1. That said, the quality of assets backing a stablecoin can determine how far the price deviates from the expected limit. 

Binance seems to be aggressively hitting its competitors on all fronts. The announcement comes hot on the heels of the platform undercutting its rival exchange Coinbase on price. 

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