Binance, the world’s largest cryptocurrency exchange in terms of trading volume, stated that it was ending support for three major stablecoins for all of its products. These included USDC Circle, Pax Dollar (USDP) and TrueUSD (TUSD).
According to a message to users, Bitcoin intends to convert all existing and new deposits of these stablecoins into its own stablecoin — Binance USD (BUSD). Bitcoin is presenting a new feature called BUSD auto-conversion, which will convert user balances of the specified Stablecoins to BUSD automatically at a 1:1 ratio after September 29, 2022.
After that, users will be able to use only their “consolidated” BUSD balance, which reflects their stablecoin holdings across all products (these include spot, futures, and margin markets), as well as liquid swaps, conversions, crypto loans, Binance Pay and Binance Giftcards.
For the specified markets, Binance is removing all trading pairs of the three-stablecoins and closing all open trades. At the same time, the stablecoins can still be withdrawn and deposited on the exchange, and users can convert their coins manually if they will.
The news has been met with mixed reactions in the crypto community. Some experts have condemned the move, saying it is a clear power grab aimed at making BUSD prosper.
While this claim sees USDC (the second largest stablecoin by market cap) as the target of Binance’s machinations, it has been refuted by the CEO of Circle — Jeremy Allaire. He believes the move is a big step toward forcing the often-criticized major stablecoin Tether (USDT) to lose ground.
Evgeny Gaev, the CEO of Wintermut, believes that removing stablecoin pairs is a good decision because it simplifies the work of market makers by ensuring that liquidity is not spread among a few stablecoins.
Bitcoin says the move is “in order to enhance liquidity and capital-efficiency for users.” Changpeng Zhao, its CEO, added that users will benefit the most because merging balances means that Binance will be able to offer the best prices and the lowest slippage.
The news comes after the exchange announced a temporary suspension of Ether (ETH) and Wrapped Ether (WETH) deposits and withdrawals on select networks until the Ethereum merger is complete.