Key takeaways:
- Binance has announced it will be consolidating USDC, USDP, TUSD, and BUSD under a single balance
- The exchange says the move will boost liquidity and improve capital efficiency
- The change will come into effect at the end of this month
Binance will “auto-convert” USDC, USDP, and TUSD holdings to BUSD, starting with Sept. 29
Binance has announced a somewhat radical change to the way it handles certain stablecoins on its platform – starting on September 29, the exchange will begin “auto-converting” USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) to Binance USD (BUSD) at a 1:1 ratio.
Binance wrote that the list of stablecoins eligible for auto-conversion could change in the future.
According to a Monday announcement, Binance hopes the move to consolidate four different stablecoins under a single balance will help “enhance liquidity and capital-efficiency for users.”
As a part of the newly announced changes, Binance will be removing all USDC, TUSD, and USDP trading pairs, 25 in total. All open spot, futures, and margin orders and balances denominated in one of the three stablecoins will be either converted to BUSD or canceled. Other products supporting one of the three stablecoins in question, such as locked and flexible savings products, will also be discontinued.
The auto-convert policy will not impact the way users are able to withdraw their funds from the platform – they will still be able to execute USDC, TUSD, and USDP withdrawals if they so choose.
Binance USD is the third largest stablecoin by market capitalization in the industry, controlling a market share worth $19.48 billion at the time of writing. Tether (USDT) and USDC boast a market cap of $67.55 billion and $51.78 billion, respectively.
Over the last couple of years, fiat-backed stablecoins have absolutely exploded in popularity, which is reflected in the exponential market capitalization increase that can be seen in the chart from The Block below.
Due to Binance’s overwhelming lead as the number one crypto exchange in terms of trading volume, the move to convert competing stablecoins to BUSD could be perceived as a strategy to help it’s stablecoin gain a larger share of the stablecoin market.
