On Monday (September 5), Binance announced that it will no longer support the use of fiat-collateralized stablecoins $USDC, $USDP, and $TUSD for trading, and instead “users’ existing balances and new deposits” will automatically get converted to $BUSD at a 1:1 ratio.

According to a blog post published on September 5 by the world’s largest crypto exchange (by trading volume), “with effect from 2022-09-29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance Platform that reflects their balances of these four stablecoins (BUSD, USDC, USDP and TUSD) post conversion.“

In its FAQ page for this new feature, Binance says that it has “introduced the stablecoin Auto-Conversion solution” in order to “provide greater trading liquidity and a better user experience.“

Binance points out that “this will not affect users’ choice of withdrawal: 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.“

Here are the main implications of this announcement for spot trading:

  • Binance will “remove and cease trading on the following spot trading pairs at 2022-09-26 03:00 (UTC): USDC/BUSD, USDC/USDT, USDP/BUSD, USDP/USDT, TUSD/BUSD, TUSD/USDT.“
  • Binance will “remove and cease trading” on the following spot trading pairs at 2022-09-29 03:00 (UTC): ADA/USDC, ATOM/USDC, AUD/USDC, BCH/USDC, BNB/USDC, BTC/USDC, BTTC/USDC, EOS/USDC, ETH/USDC, LINK/USDC, LTC/USDC, SOL/USDC, TRX/USDC, WIN/USDC, XRP/USDC, ZEC/USDC, BNB/USDP, BTC/USDP, ETH/USDP, ADA/TUSD, BNB/TUSD, BTC/TUSD, ETH/TUSD, TRX/TUSD, XRP/TUSD.“
  • “Users will be able to view their USDC, USDP and TUSD balances under the BUSD denominated account balance when the conversion is complete.“
  • “All pending trade orders will be automatically removed after trading ceases in each respective trading pair. Users can then trade the assets in the respective BUSD trading pairs.“

Here is how CoinDesk expects this announcement to affect the stablecoin space:

“The decision effectively banishes the second-largest stablecoin, USDC, from one of the most prominent perches in crypto, erecting an obstacle to overtaking Tether (USDT) as the biggest one. USDT’s $68 billion market value leads USDC’s $52 billion, while BUSD is in third place at $19 billion. USDP and TUSD are far smaller.“