Circle CEO thinks Binance’s USDC Exit is a good thing

Circle CEO thinks Binance’s USDC Exit is a good thing

Jeremy Allaire – CEO and co-founder of Circle – isn’t sweating Binance’s recent decision to stop supporting trades for USD Coin (USDC).

In a thread on Tuesday, Allaire broke down why he thinks the development is not only good for Binance, but ultimately a boon for USDC utility and adoption.

Binance Converges Around BUSD

On Monday, Binance announced that all customers’ existing funds held in USDC, USDP and TUSD will be automatically converted to Binance USD (BUSD) on September 29. The exchange’s original stablecoin is currently the third largest by market capitalization – behind only USDC and Tether’s USDT.

The move is intended to “improve liquidity and capital efficiency” at the exchange by consolidating multiple dollar-equivalent cryptocurrencies around one asset.

The change will eliminate trading of USDC at Binance, and cause all future USDC deposits to the exchange to be converted to BUSD. However, users can still choose to withdraw their BUSD account balance from the exchange in either USDC, USDP and TUSD if they wish.

Given these details, Allaire claimed that the forced conversion “will likely result in more USDC flowing to Binance.”

“With consolidated dollar books, it will now be easier and more attractive to move USDC to and from Binance for core markets trading,” he explained.

Unlike BUSD, USDC sees large volume and usage outside of Binance’s exchange. As such, Allaire believes the change will help USDC become the market’s preferred stablecoin rail for moving funds between centralized and decentralized exchanges.

“I am very confident in the long game we have played and are playing with the USDC, and with Circle’s role as a NEUTRAL market infrastructure player,” the CEO concluded.

What about Tether?

USDT – still the world’s largest stablecoin – was notably excluded from Binance’s consolidation. The cryptocurrency will remain tradable on the exchange.

Allaire said there were two reasons for this. First, the current USDT liquidity at Binance would have made a move to BUSD too disruptive. Second, he argued that USDT is “not even close” to qualifying as a cash-equivalent asset.

Tether has often been criticized for having unreliable reserve funds to back its stablecoins – more so than its competitors. Part of this stems from Tether’s partial use of commercial paper in its reserves, while BUSD and USDC backed entirely by cash and US Treasuries.

Tether defended opposed such claims by the Wall Street Journal last month. The company clarified that it plans to eliminate its certificate holdings by the end of the year and that the business is still profitable.

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