Circle co-founder says converged dollar pounds on Binance would be good for USDC

The world's largest crypto exchange announced on Monday that it will stop trading support for USDC and self-secret deposits on its own stablecoin after September 29.

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According to a new post on Twitter, Jeremy Allaire, co-founder and CEO of USD Coin (USDC) stablecoin issuer Circle, said that Binance's recent decision to merge the dollar stablecoins is "a good thing" for the USDC. “This move would lead to a gradual net shift from USDT to BUSD and USDC,” Allaire said.

The previous day, Binance announced that it would stop trading USDC support and automatically convert deposits after September 29 into a consolidated Binance USD balance including other USD-pegged stablecoins . Users will be able to withdraw individual components of the Consolidated Balance at face value.

Some users have pointed out that it is now possible to deposit and withdraw USDC seamlessly in Binance. Prior to the change, one had to first convert USDC to BUSD or USDT and then use it to trade leveraged products. Therefore, the overall liquidity of USDC would increase.

However, others have pointed out that the automatic conversion could potentially result in a larger redemption of USDC to mint more BUSD. According to Nansen, the USDC held by Binance fell to less than 1 billion from 2.5 billion in July. Meanwhile, the exchange holds about 5 billion USDT.

Data from Dune Analytics suggests that USDC is currently the second most popular stablecoin in the world, accounting for 33.5% of transactions in the category. It gained market share two years ago. Tether (USDT) is currently the most widely used stablecoin, with a market share of 50.3%. Meanwhile, Binance USD ranks third with 15.1%.