Binance, the largest cryptocurrency exchange by trading volume, recently announced its stance on removing support for three major stablecoins.They include Circle's USDC, Pax Dollar (USDP), and TrueUSD (TUSD) .
In a notice to its users, Binance plans to convert any existing user balances and new deposits of these stablecoins to its own stablecoin, Binance USD (BUSD).
The exchange is introducing a said new feature called BUSD Auto-conversion that will automatically convert users' balances of the named stablecoins to BUSD on a 1:1 basis with effect from September 29, 2022.
After this said conversion, Binance users will only be able to use a "consolidated" BUSD balance that reflects their holdings of the stablecoins across all products including spot, margin, and futures markets, as well as liquid swap, convert, crypto loans, Binance Pay, and Binance Giftcards.
Binance is also keen at removing all trading pairs of the three stablecoins and closing all open trades.
However, the notice states that the stablecoins can still be withdrawn and deposited on the exchange and that users who do not wish to wait for the automatic conversion can perform it manually.
- THE MOTIVE BEHIND THIS DEVELOPMENT BY BINANCE
The announcement has been met with a mix of reactions from the crypto community. Some observers have decried the move saying that it is an overt power grab intended to make BUSD prosper.
While this claim eyes USDC, which is the second biggest stablecoins by market cap, as the target of Binance's schemings, it has been debunked by Jeremy Allaire, the CEO of Circle.
In a tweet, Allaire stated that the converged dollar books are a good thing and have increased USDC's utility.
He was responding to an analysis put forth by Evgeny Gaevoy, the CEO of Wintermute, who held that removing the stablecoin pairs is a good thing as it makes the job of market makers easy by ensuring liquidity is not split between multiple stablecoins.
He adds that the move is also a big step to making the often criticized largest stablecoin Tether (USDT) lose ground.
For its part, Binance maintains that the move is "in order to enhance liquidity and capital-efficiency for users." Binance CEO Changpeng Zhao (CZ) added in a tweet that users will stand to benefit the most as the merging of the balances would mean that Binance will offer the best prices and lowest slippage.
Meanwhile, the announcement is coming after Binance also said it would temporarily suspend deposits and withdrawals of Ether (ETH) and Wrapped Ether (WETH) on selected networks until after the Ethereum merge.
The move by Binance has been made to boost liquidity and capital efficiency for users on the exchange.At least this can be said to be the keen motive behind this drastic upgrade as regards its services .
Personally reflecting on Binance ‘Auto-convert’ move , I feel it is in an earnest bid to enhance as much liquidity as possible.
If the USDC stablecoin is no longer present on the largest cryptocurrency trading platform by trading volumes, the daily volumes of the asset could of course record notable changes.
The news of the change has attracted mixed reactions from the cryptocurrency community.
Some members of the cryptocurrency community have opposed this move by Binance. However, others have upheld the decision and applauded the change. However, some have questioned the choices made by the exchange.
It is said that several people have questioned why Binance has made the decision, asking why Binance was relegating USDC .
Some users also insinuated that Binance’s status as the largest exchange and its dominance in the web 3.0 & crypto sector enabled it to do what it wanted.
What do you guys think ? Is Binance converting USDC and other stablecoins
to BUSD a market share grab ?? Is it really the step in the right direction ???