Samson Mow – a well-liked Bitcoin advocate and developer – not too long ago commented on Binance’s choice to take away USDC buying and selling from its platform.
He known as it “the beginning of the end for USDC,” predicting that it’s going to drastically scale back the coin’s utilization and market cap.
How Binance Can Steal Circle’s Reserves
In a Twitter thread on Wednesday, Mow dismissed makes an attempt from sure business leaders to put a “positive spin” newest transfer.
“You can say it’s good UX for USDC users, but that’s neither here nor there,” he mentioned.
Binance introduced on Monday that it’s going to mechanically convert all USDC, USDP, and TUSD deposits at its trade into BUSD.
The trade will nonetheless settle for these stablecoins for future deposits, however merely commerce them into BUSD upon switch. Likewise, customers also can select to withdraw their BUSD steadiness as any of these cash.
Following the announcement, Circle CEO Jeremy Allaire claimed that Binance’s order ebook consolidation would in the end profit USDC adoption.
“It will now be easier and more attractive to move USDC to and from Binance for trading core markets,” he mentioned. Moreover, given BUSD’s restricted utilization past Binance’s trade, he predicted it may assist USDC evolve into the go-to stablecoin bridge between centralized and decentralized exchanges.
Mow, nevertheless, was far much less looking forward to the stablecoin supplier. He mentioned the change will permit Binance to successfully ‘steal’ Circle’s USDC reserves by exploiting the agency’s zero-fee stablecoin redemptions.
“Because Binance can mint and redeem USDC for free, they can just take USDC reserves for themselves,” he defined. “We’re going to see both a decline in USDC trading volume AND AUM, while BUSD gains on both fronts.”
USDC is at present the second largest stablecoin, with a market cap of $51 billion. BUSD is a distant third, sitting at simply $19 billion.
Is Tether Additionally Weak?
Tether’s USDT – the long-standing king of stablecoins – was notably not included in Binance’s consolidation plan. Circle’s CEO claimed this was as a result of USDT doesn’t qualify as a dollar-equivalent asset attributable to low-quality reserves.
As soon as once more, Mow has a distinct speculation: Binance received’t pull the identical stunt with USDT as a result of its token redemptions value 10 foundation factors every. Due to this fact, making an attempt to “steal” USDT’s market cap might be extremely dangerous and dear.
Mow concluded that different exchanges that assist stablecoins – reminiscent of Gemini with GUSD – strive an identical technique.