In a move that has stirred controversy and uncertainty from the moment it was announced, crypto exchange Binance has announced that it will be converting existing user balances in three stablecoins into its own stablecoin – BUSD – effectively ending support for BUSD’s rivals from spot, future and margin trading at its cryptocurrency exchange.
The three stablecoins are USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD), all of which are strong competitors of BUSD. USDC, in fact, is the second largest stablecoin and has a market capitalization of nearly $51.9 billion. In contrast, Binance’s stablecoin offering, BUSD, is valued at a far lesser $19.4 billion and is the world’s third-largest stablecoin.
“#Binance to Auto-Convert $USDC, $USDP, $TUSD, to #BUSD (Binance USD),” the crypto exchange wrote in a tweet.
— Binance (@binance) September 5, 2022
In an official announcement, it informed that both existing user balances and new deposits of BUSD’s rival stablecoins will automatically be converted into its own stablecoin.
This conversion will be done at a 1:1 ratio and will be effective from September 29, 2022, from 03:00 (UTC), following which users will be able to trade with a consolidated BUSD balance on the crypto exchange which will combine their existing holdings of all the four stablecoins.
If users wish to convert their holdings in the stablecoins to BUSD before the auto-conversion takes place, then they can process it manually on Binance Convert till September 29. The conversion is a one-way process, that is, users can manually convert USDC, USDP and TUSD to BUSD, but not the reverse.
Additionally, for manual conversion, they need to have a minimum of 1 USDC, USDP or TUSD – if their user balance is less than that amount, then it will be converted as part of the Auto-Conversion. Once that is done, they can withdraw USDC, USDP or TUSD at a ratio of 1:1 from their BUSD balances – Binance informed that this conversion will not affect the choices of users when it comes to withdrawal.
This decision, which comes a surprise to many crypto enthusiasts, means that the three stablecoins will cease to be tradeable assets on the world’s largest crypto exchange once September 29 comes – even though Binance CEO Changpeng Zhao clarified in a tweet that Binance was not delisting USDC.
Binance explained its decision of effectively banishing the trading of the stablecoins from its platform by saying that it was a step towards enhancing the liquidity and capital-efficiency of users. But it will also mean that BUSD will effectively become the biggest name to trade on the platform as a stablecoin.
Unsurprisingly, this decision divided users and crypto enthusiasts into two groups – one hailed the decision while another criticized it, saying that a “crypto monopoly.” A user on Twitter wrote that the crypto exchange was effectively “deleting competitors, like Google did 10 years ago,” while another replied to Binance’s tweet with “imagine converting ur customers’ stable of choice to ur own shit stable even without asking.”
Crypto monopoly 101
They also hired ex Brazilian central Bank President as advisor, because bankster connections matters. For regulations.
Binance is deleting competitors like Google did 10 years ago.
— Bloodgood (@bloodgoodBTC) September 5, 2022
Another user supported the decision, tweeting, “Shots Fired! As much as I dislike Binance, folks need to stop using USDC.”
Shots Fired! As much as I dislike Binance, folks need to stop using USDC.
— Randy Hilarski (@RandyHilarski) September 5, 2022