The issuer of the third largest stablecoin, Binance, will stop supporting its larger competitor USDC, automatically transferring customer funds to its Binance USD token from alternatives, including USD Coin. This will effectively remove USDC as a trading asset on the giant Binance platform, reports CoinDesk.
On September 29, the exchange will convert all investments in USDC, Pax Dollar and TrueUSD to BUSD, and after that customers will see their tokens automatically converted to Binance stablecoin. However, they will be able to withdraw money denominated in USDC, USDP or TUSD when withdrawing money from Binance.
The decision effectively knocks USDC, the second largest stablecoin, from one of the best positions in the cryptocurrency market. It will also likely prevent it from overtaking Tether (USDT) to become the largest stablecoin. USDT has a market cap of $68 billion, while USDC has a market cap of $52 billion and Binance’s BUSD has a market cap of $19 billion. The business is dominated by USDT, which occupies 44% of the market.
Stablecoins are part of the foundation of the crypto market, serving as digital substitutes for the US dollar or other fiat currencies. It is a type of money or currency whose value derives not from its intrinsic value or the guarantee of exchange for gold or another currency, but from a government mandate (fiat) to use it as a means of payment. In fact, the price of stablecoins is pegged to the regular currency. For example, each token pegged to the US dollar should always be worth almost exactly $1, although the quality of the assets backing the stablecoin can affect how much its price deviates.