Circle CEO Jeremy Allaire said that Binance’s forced conversion will “likely lead to more USDC flowing to Binance”.
A day after crypto exchange Binance announced removing Circle’s USDC stablecoin from the platform, Circle CEO Jeremy Allaire shared his opinion regarding the matter.
In his Twitter thread on Tuesday, Allaire said that the development is not only good for Binance but could also help in boosting USDC’s adoption and utility. “This move would lead to a gradual net share shift from USDT to BUSD and USDC,” said Allaire.
On Monday, Binance announced that by September 29, all of its customer’s funds in USDC, USDP, and TUSD will be auto-converted to BUSD. Binance’s native stablecoin BUSD is currently the third-largest stablecoin by market cap.
Binance said that the move will “enhance liquidity and capital-efficiency” by consolidating several USD-pegged cryptocurrencies into a single asset. However, Allaire believes that Binance’s forced conversion will “likely lead to more USDC flowing to Binance”. He further explained: “With consolidated dollar books, it will now be easier and more attractive to move USDC to and from Binance for trading core markets”.
While BUSD’s major use has been only on the Binance exchange, the same is not true for USDC. Circle’s stablecoin USDC sees greater volume and usage even on other exchanges.
The Circle CEO also added that the change will help USDC become the preferred stablecoin of the crypto sector for moving funds between centralized and decentralized exchanges. “I am very confident in the long game we have played and are playing w USDC, and with Circle’s role as a NEUTRAL market infrastructure player,” concluded the CEO.
Why Wasn’t Tether’s USDT Excluded?
Interestingly, while Binance decided to exclude rival stablecoins, it left out Tether’s USDT – still the world’s largest stablecoin from exclusion. As per Allaire, there could be two reasons for this. The first is that the current liquidity of USDT at Binance would make the transition too disruptive.
As the second is that Tether’s USDT is “not even close” to qualifying as a cash-equivalent asset. Tether’s USDT still dominates the crypto market with a 50.3% share of the stablecoin market. On the other hand, Circle’s USDC accounts for 33.5% of transactions in the category. It would be interesting to see how Binance’s move impacts other excluded stablecoins.
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