Circle CEO Thinks Binance’s USDC Exit is a Good Thing

Jeremy Allaire – CEO and co-founder of Circle – isn’t sweating over Binance’s latest decision to stop supporting trades for USD Coin (USDC). 

In a thread on Tuesday, Allaire broke down why he thinks the development is not only good for Binance but ultimately a boon to USDC utility and adoption.

Binance Converges Around BUSD

On Monday, Binance announced that all of its customers’ existing funds held in USDC, USDP, and TUSD would be auto-converted into Binance USD (BUSD) on September 29th. The exchange’s native stablecoin is currently the third largest by market cap – behind only USDC, and Tether’s USDT.

The move is meant to “enhance liquidity and capital-efficiency” at the exchange by consolidating multiple dollar-equivalent cryptocurrencies around one asset. 

The change will eliminate trading of USDC at Binance, and cause all future USDC deposits to the exchange to be converted into BUSD. However, users can still choose to withdraw their BUSD account balance from the exchange in either USDC, USDP, and TUSD if they so choose. 

Given these details, Allaire claimed that the forced conversion “will likely lead to more USDC flowing to Binance.”

“With consolidated dollar books, it will now be easier and more attractive to move USDC to and from Binance for trading core markets,” he explained. 

Unlike BUSD, USDC sees great volume and usage outside of Binance’s exchange. As such, Allaire believes the change will help USDC become the market’s preferred stablecoin rail 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. 

What About Tether?

USDT – still the world’s largest stablecoin – was notably excluded from Binance’s consolidation. The cryptocurrency will remain tradeable at the exchange. 

Allaire said there were two reasons for this. Firstly, the current USDT liquidity at Binance would have made a transition to  BUSD too disruptive. Secondly, he claimed that USDT is “not even close” to qualifying as a cash-equivalent asset. 

Tether has often been criticized for holding unreliable reserve assets to back its stablecoins – more so than its competitors. Part of this stems from Tether’s partial use of commercial paper in its reserves, whereas BUSD and USDC are backed solely by cash and U.S. treasuries. 

Tether defended itself against such allegations from the Wall Street Journal last month. The company clarified that it plans to eliminate its commercial paper holdings by the end of the year and that its business remains profitable. 

The post Circle CEO Thinks Binance’s USDC Exit is a Good Thing appeared first on CryptoPotato.

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