Reaction To Binance’s Auto-Conversion Decision
Binance, the world’s largest crypto exchange, announced on September 5th that it would drop a number of USDC trading pairs and they would be automatically converted into BUSD balances by September 29th.
A lot of crypto proponents considered the move as controversial and said the same on social media. Jeremy Allaire, the chief executive of Circle, said that this would likely increase the flow of USDC to Binance.
The CEO of Circle recently discussed Binance’s decision of providing its users with better capital efficiency and liquidity via auto-conversion.
The exchange has opted to remove a number of stablecoin trading pairs and announced that TUSD, USDP, and USDC balances would be converted into BUSD in a 1:1 ratio.
Coinbase and Circle are the companies behind the Centre Consortium, which is the custodian and issuer of the USDC stablecoin and the euro coin (EUROC).
According to Allaire, this forced conversion has resulted in a number of misleading interpretations and headlines.
The CEO further added that Binance was not putting an end to support for USDC and that the change the exchange has made would result in more of the stablecoin flowing to Binance.
The Circle CEO said that in a regulated market like the United States, a trading platform choosing to convert its existing customer assets unilaterally would not work.
He also added that he would not have done the same. Allaire stated that the crypto exchange was trying to use cash equivalent stables for consolidating dollar liquidity.
He also remarked that the switch could not be done with tether (USDT) for now because that would be too disruptive.
He said that Binance’s move was good for market depth and liquidity, but Tether is certainly not cash equivalent, so doing the same with it would not be a smart move.
Other than Allaire, the issuer of TUSD, Trueusd also talked about Binance’s decision. The official Twitter account said that they would always support Binance and its ecosystem.
It further said that they would continue with their support for the multi-chain TUSD deposit and withdrawal for the token standards.
Allaire believes that now that Binance has decided to consolidate its dollar books, moving USDC to and from the crypto exchange to trade in core markets has become a lot more attractive.
The USDP issuer, Paxos, also added to the conversation as its stablecoin is also part of the auto-conversion.
The company discussed the recent move of Binance towards consolidating liquidity and stated that it was a positive step in terms of customer safety because it was primarily pushing BUSD.
Paxos stated that as compared to other stablecoins in the market, BUSD, which is issued by Binance, is regulated by the NYDFS.
This organization is known for setting rules and then ensuring compliance with the said rules and Paxos believes that this adds a layer of safety.
Binance provided a complete list of trading pairs that will no longer be listed and has given clients time to switch.