By Shivani Tanna and Elizabeth Howcroft
(Reuters) -Binance, the world’s largest crypto trade, stated on Monday it’ll routinely convert consumer balances and new deposits of the stablecoins USD Coin, Pax Dollar and True USD into its own stablecoin, Binance USD.
The transfer is meant to improve liquidity and capital effectivity for customers, Binance stated in a press release https://www.binance.com/en/assist/announcement/e62f703604a94538a1f1bc803b2d579f.
Stablecoins are a kind of cryptocurrency designed to preserve a relentless worth, for instance by way of a 1:1 US greenback peg. They play an important function in facilitating crypto buying and selling, and permit merchants to retailer idle crypto money with out changing it again into fiat foreign money.
Binance stated it’ll cease buying and selling on spot pairs which embrace USD Coin, Pax Dollar and True USD, though customers will nonetheless have the option to withdraw funds within the type of these stablecoins.
The conversion of customers’ holdings will happen on Sept. 29, Binance stated.
USD Coin (USDC) is issued by US agency Circle and is the world’s second-largest stablecoin, with a market capitalization of $51.8 billion, in accordance to crypto knowledge supplier CoinGecko. Binance’s stablecoin (BUSD) is valued at about $19.4 billion, in accordance to CoinGecko.
USDC merchandise affected embrace saving accounts, DeFi staking subscriptions and crypto loans, which will probably be closed and liquidated on Sept. 23, Binance stated.
“While optimizing greenback liquidity on the world’s largest trade might carry advantages, the paradigm does increase potential market conduct questions,” a spokesperson for Circle stated in emailed feedback, with out elaborating on what questions.
Jeremy Allaire, the CEO of Circle, stated in a tweet https://twitter.com/jerallaire/standing/1566921483003334657 that “converged greenback books on Binance […] is an effective factor. USDC utility simply elevated.”
In one other tweet https://twitter.com/jerallaire/standing/1566922064119971840, Allaire stated he predicts the transfer will lead to USD Coin and Binance USD gaining market share from the world’s largest stablecoin, Tether.
(Reporting by Shivani Tanna in Bengaluru; Editing by Leslie Adler, Louise Heavens and Chizu Nomiyama)