The world's largest exchange operator wants customers to transact with its namesake stablecoin over others.
Why it matters: The move is a land grab for Binance, which is using its weight to boost Binance USD, the third-largest stablecoin in circulation, to the detriment of its larger peers — Circle's USDC, No. 2, and Tether's USDT, No. 1.
Driving the news: Binance on Monday said it will automatically convert customers' dollar-pegged stablecoins like USDC, Paxos' paxdollar (USDP) and trueUSD (TUSD) into Binance USD (BUSD), effectively delisting competing coins on the exchange.
Big picture: In effect the fiat-backed stablecoin market is a three-horse race, with market share almost evenly split between Tether and now Binance/Circle, per data compiled by The Block.
What's happening: Starting Sept. 29, existing USDC, USDP and TUSD balances in user accounts will be automatically be converted, associated trading pairs such as BTC/USDC, for example, will also cease to trade and any staking on those assets will also be discontinued.
What they're saying: "This conversion is already an accepted practice in the industry and has proven to be in the interest of users above all," Patrick Hillman, chief communication officer of Binance, said in an emailed statement to Axios.
Crystal's thought bubble: Remember Disney Dollars? Disney offered customers a 1:1 equivalent to U.S. dollars underwritten by Scrooge McDuck to spend on merch and food within its theme parks. There isn't anything truly nefarious about Binance wanting its customers to transact in BUSD in its own ecosystem in the same way.
Flashback: Binance at first merely encouraged switching between stablecoins, touting out "ultra-low costs" to do so for a few select fiat-backed ones using Binance Convert in early June.
The other (same) side: "While optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions," Rachel Busch, a spokesperson for Circle, said in a statement in response to Axios' queries.
What others are saying: Evgeny Gaevoy, chief of leading market maker Wintermute, tweeted that the move is a net positive for liquidity, because trading wouldn't be split between a number of dollar-backed stablecoins, but also a net negative for Tether and Circle.
The intrigue: "We potentially will see other exchanges switching/deciding on which stablecoin they will support — for most of them it’s a question of efficiency just like it is for Binance," he says.
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