Binance, the world’s largest cryptocurrency exchange, announced on Monday, September 5, that it is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) stablecoins at a 1:1 ratio.
From 03:00 hours UTC on September 29, the platform will automatically convert user balances and new deposits of the stablecoins into its stablecoin, Binance USD.
To reiterate, Stablecoins are a type of cryptocurrency designed to be pegged to a reference asset like a commodity or currency. In most cases, stablecoins are pegged to a US dollar.
The move comes to enhance liquidity and capital efficiency for users, says Binance. Users can withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance.
Binance also said it would remove and cease any trading on spot pairs, including USDC, USDP, and TUSD.
USD Coin (USDC), an Ethereum-based stablecoin, is managed by a consortium called Centre, founded by US firm Circle. It is the world’s second-largest stablecoin with a market capitalisation of $51.8B, according to crypto data provider CoinGecko.
Jeremy Allaire, CEO of Circle, says in a tweet that the “change will likely lead to more USDC flowing to Binance.”
In another tweet, he adds, “Given how limited BUSD usage is outside of Binance, this will likely benefit USDC usage as the preferred cross CEX and DEX stablecoin rail.”
At the time of writing, Binance USD has a circulating supply of 20B with a market capitalisation of $19.4B. It is also a 1:1 USD-backed stablecoin approved by the New York State Department of Financial Services (NYDFS).
Last month, Binance appointed its co-founder, Yi He, as the new head of its Venture Capital arm and incubator, Binance Labs, after it raised $500M (approximately €491M) from global institutional investors.
In July, the Dutch Central Bank (DNB) imposed a fine of €3.3M on Binance for offering crypto services in the Netherlands without a legal registration with DNB. According to the central bank, the crypto exchange was dealt with a third category fine, and the administrative fine against Binance had been increased due to increased seriousness and culpability.
Earlier this year, the company launched a payments technology company and its official fiat-to-crypto payments provider – Bifinity. According to the company, Bifinity’s solution connects businesses, merchants, and users to the world of crypto and blockchain.