Binance Removes Most Trading Pairs And DeFi Features For USDC And Two Other Stablecoins

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Binance is the leading cryptocurrency exchange globally. It has the most volume and users, but the team sometimes makes highly unusual decisions. The decision to auto-convert various stablecoins to BUSD – at least visually – is somewhat controversial but it strangely makes some sense.

What Is Binance Doing Now?

In a new blog post, the Binance team explains an upcoming change that will be enforced upon all users. The exchange cities “a need to enhance liquidity and capital-efficiency for users”, even though most people will see it differently. Introducing a BUSD auto-conversion for current balances and future deposits is a bit unusual. Users who have or receive USDC, USDP, and TUSD pegged assets will have that balance displayed as a consolidated BUSD balance.

Considering how one stablecoin is worth as much as the next – unless they are algorithmic stablecoins – the move should not impact users too much. However, it will undoubtedly confuse users who expected their balances to be displayed in USDC, USDP, or TUSD. Not everyone wants to deal with BUSD – even within the Binance ecosystem – and it seemingly degrades any transparency on how the exchange handles users’ balances in those currencies.

Interestingly, users can withdraw from that unified BUSD balance in either USDC, USDP, or TUSD. As such, the change appears to be a visual improvement, but there will undoubtedly be some dismay. However, it appears Binance wants to move away from supporting these three stablecoins as it will remove key trading pairs for those assets. That includes USDC, USDP, and TUSD pairs against BUSD, BTC, BNB, ETH, ADA, ETH, etc.

Binance’s decision to no longer support USDC as margin assets for its USD-M Futures is making things even more intriguing. All USDC assets in that wallet will be converted to BUSD starting on September 29. For those who prefer to remove their USDC liquidity altogether, there is an option to do so by moving funds to the Spot Wallet. It remains a tad unclear if all of these changes are necessary, but there is no choice for Binance users.

A Precedent For Other Exchanges?

The changes involving USDC trickle down to all other features within the Binance ecosystem. The exchange will no longer support USDC for DeFi staking, Flexible Savings, Liquid Swap, Crypto Loans, etc. There appears to be some “spat” between the exchange and how USDC is issued/used/handled these days, although there is no indication of what might have influenced this change. Dropping all visible support – except for withdrawals and deposits – for the second-largest stablecoin by market cap raises many tough questions. 

Unfortunately, this may serve as a precedent for other exchanges and trading platforms. If there is a regulatory reason for Binance to make these changes, other companies will follow suit eventually. Moreover, these changes will – likely – negatively impact the popularity of USDC. Both USDP and TUSD are lesser stablecoins with a smaller market share, although the whole ordeal remains pretty strange and unusual. 

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