Binance, the world’s largest crypto exchange by volume, has said that it will start converting any existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) into the company’s own stablecoin Binance USD. Binance said in a blog post; “Existing USDC, USDP, and TUSD balances in user accounts will be automatically converted to BUSD at 2022-09-29 03:00 (UTC) (“Auto-Conversion”). All users will be able to see the converted balance on their accounts within 24 hours.”
— Binance (@binance) September 5, 2022
Binance Disclosed the Reason Behind the “Auto Conversion” of Stable Coins to BUSD
Revealing the reason behind the ‘Auto Conversion,’ the company said in a statement; “In order to enhance liquidity and capital-efficiency for users, Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP, and TUSD stablecoins at a 1:1 ratio.” However, the crypto exchange firm explained the auto conversion move will not affect users’ choice of withdrawal. As stated in the blog post; “Users will continue to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance.”
Hagen Rooke, a partner at law firm Reed Smith LLP in Singapore, told an international media outlet; “The decision is quite bold and unprecedented. Commercially it is a smart move for Binance because its service offering will now increasingly converge around its house-own BUSD product.” A spokesperson for Circle, the company behind USDC, said; “Since Binance has control over both exchange and their stablecoin, this doesn’t sound like an equal treatment from Circle’s perspective.”
Binance Exempted Tether
Binance has exempted USDT from its auto-conversion announcement and hasn’t given any explanation about the non-involvement of Tether’s USDT, which currently has a circulation of around $67 billion. A representative from Tether told the media; “The consolidation of stablecoins on one of the world’s most active exchanges foreshadows future competition among stable assets.” Circle CEO Jeremy Allaire said that Binance is trying to consolidate dollar liquidity with cash equivalent stables and the change will likely lead to more USDC flowing to Binance.