(Kitco News) - Binance, the world’s leading cryptocurrency exchange by volume, has disclosed that it will start auto-converting various stablecoins on the platform into its native Binance USD (BUSD) stablecoin, beginning on Sept. 29.
The stablecoins affected include USD Coin (USDC), Pax Dollar (USDP) and TrueUSD (TUSD), which will all be converted to BUSD at a 1:1 ratio. Notably absent from the list is Tether (USDT), which the exchange has said is not currently being considered for auto-conversion. However, that could change in the future.
Binance indicated that the move was made as a way to enhance liquidity and capital efficiency for its users. The exchange also made a point to reassure users that they will still be able to withdraw the unsupported stablecoins, according to the announcement.
“Users will continue to be able to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance,” the exchange said. Users will simply need to select which type of stablecoin they wish to receive when they initiate the withdrawal process, and Binance will automatically convert BUSD into their stablecoin of choice.
Changpeng Zhao (CZ), the founder and CEO of Binance, followed up the announcement with a tweet indicating that the move was made to consolidate stablecoin liquidity on the exchange to give the “best price, [and] lowest slippage for users.”
Along with the auto-conversion, trading pairs for the listed stablecoins will also be removed from the exchange and consolidated into BUSD trading pairs.
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In response to the move, Jeremy Allaire, the CEO of USDC issuer Circle, voiced his support for the decision by tweeting, “Converged dollar books on Binance – now same as on FTX and Coinbase – is a good thing. USDC utility just increased.”
In a follow-up tweet, Allaire suggested that the change by Binance could trigger a “net share shift from USDT to BUSD and USDC,” which the CEO expects to occur over time.
“Given how limited BUSD usage is outside of Binance, this will likely benefit USDC usage as the preferred cross CEX and DEX stablecoin rail. Unless Binance can convince all their competitors to get behind BUSD.”
As for why USDT was excluded from the list, Allaire highlighted the fact that while “Binance is trying to consolidate dollar liquidity with cash equivalent stables, [...] USDT is NOT cash equivalent – not even close.” Due to the current USDT liquidity on Binance, Allaire suggested that attempting to include Tether in the auto-conversion “would be too disruptive.”
