Binance Pulling Support for USDC

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Tether’s lead over USDC reaches $16 billion as Binance takes action to restrict rival stablecoins

Binance Pulling Support for USDC
Binance Pulling Support for USDC / Image Credit: CRYPKYP
Source: Decrypt
1662627298 08 Sep / 08:54

It appeared for a moment that Circle's USDC stablecoin would soon surpass Tether, its main rival. The difference between the market capitalizations of the two stablecoins was almost $10 billion between June and July. Even if that is still a sizable margin, it should be remembered that USDT and USDC began the year with a $36 billion gap.

But since then, things have drastically changed. As of this writing, USDT has a market cap of $68 billion, and USDC has a market cap of $52 billion. That implies Tether has closed the $16 billion gap between it and its competitor.

The assets that support USDT and let users redeem it for cash have been significantly reduced by Tether's treasury during the past month. Additionally, Tether seems to be staying out of the U.S. Office of Financial Assets Control's sanctions against Tornado Cash, an Ethereum mixer. Although U.S. law enforcement has not yet requested the firm to implement sanctions, the corporation has not expressly stated that it is doing so.

At the same time, Circle’s USDC, which is issued, has faced various challenges.

The USDC, Pax Dollar (USDP), and True USD (TUSD) deposits of users will start to be converted into Binance USD (BUSD), the stablecoin that Binance launched over the weekend. The news appeared to be bad for USDC on the surface.

However, Circle CEO Jeremy Allaire disagrees.

He stated yesterday on Twitter that “given how minimal BUSD usage is outside of Binance, this will likely favor USDC usage as the preferred trans-CEX and DEX stablecoin train.” “Unless Binance can get all of their rivals to support BUSD.

If, as Allaire forecasts, USDC becomes the favored method to transfer money into and out of Binance’s exchange, it might gain value, simplifying his case.

The chief technology officer of Bitfinex and Tether, Paolo Ardoino, didn’t respond to Allaire directly. Still, he did retweet others who claimed that the Binance announcement marked the “beginning of the end for USDC” and that it was a “hostile takeover of competing stablecoins to capture the yield on their deposits.”

In addition, the long-awaited combination of Concord Acquisition Corp. and Circle faces an unclear future. The purchase was first revealed in July last year and valued Circle at $4.5 billion. The company’s valuation increased to $9 billion when it declared in February that it had canceled its contract with the special purpose acquisition company or SPAC and signed a new one.

According to the news release, the agreement would be finalized by December this year, with a potential extension until January 2023.

The two largest dollar-pegged stablecoins entered 2022 with a positive outlook.

According to CoinMarketCap, Tether (USDT) had a market value of $78 billion in January and was on its way to reaching a new all-time high of $83 billion in April.

While this was happening, USDC’s market valuation began the year at $42 billion, reached a high of $53 billion in March, and then started declining. Then, on May 9, the stablecoin for the Terra network, TerraUSD, lost its link to the dollar and saw its price fall to $0.35. The $40 billion that Terra’s meltdown removed from the cryptocurrency market over the following few weeks.

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