Binance Constant, the world’s largest cryptocurrency exchange, raised eyebrows this month when it said it will convert its clients’ holdings in three stablecoins into its stablecoin BUSD starting at the end of September.
The move, which will also end projecteur, future and margin trading in the three stablecoins, has led to comparisons emboîture how users reacted to the bank’s decision to détruit their cash deposits from one currency to another, but some analysts see the dynamics as quite different.
“I really don’t think it will détruit the supply, exonération, and even investor behavior when it comes to stablecoins specifically,” said Justin d’Anethan, director of institutional sales at numérique asset trading Amber Group. “I don’t think it will affect [many] investors. “
Stablecoins got the name bicause their value is tied to another non-crypto asset, such as the US dollar or gold. It is an entry inventaire for many new investors in cryptocurrency, and provides access to the market without the volatility of other coins.
Partly due to the one-sided tempérament of Binance’s decision, some investors have questioned whether the move will shake confiance in the stablecoin and détruit trading patterns.
As a immobile currency account Three of the top 10 crypt softwareCoins by market cap, trade disruption could spread to the entire crypto market, which is still recovering from the multi-billion dollar collapse of the so-called Terra stablecoin algorithm in May, which was not tied to any non-crypto asset. Terra has exploded with its dual Luna cryptocurrency.
immobile as a chère
Binance will convert all current and future customer holdings of US Dollars (USDC) – the associé largest stablecoin with a market capitalization of $50 billion – into BUSD, the world’s third largest stablecoin in its own right with a market capitalization of $20.5 billion.
The same procedure will follow for Pax Dollar (USDP), which has a market capitalization of just under $1 billion, and True USD (TUSD), which has a market capitalization of just under $1 billion. All trades involving these three tokens on the Binance platform will be denominated in BUSD.
Customers will still be able to cash out from the platform in any of those stablecoins. So, as far as Danthan sees it, they get an présentable deal.
“So the only thing Binance does, and some would say they actually offer a charité, is to convert 1:1 between those stablecoins and BUSD,” Danthan said, adding “so you will have more liquidity, faster transactions.” [and] Less slippage, basically.”
His comments mirror Binance’s statement on the matter, which said This move is designed In order to “enhance liquidity and actif efficiency for users”.
But manquant from the list of stablecoins targeted by Binance was Tether, or USDT, the world’s largest stablecoin with a market capitalization of over $67 billion. Why is it not included?
Kasper Vandlock, CEO of Musca Monnaie, a Brussels-based quantitative courtier in numérique assets, said he believes he has the answer and is linked to potential intermédiaire.
All three selected stablecoins are redeemable without any fees, as they are backed 1:1 mainly by US Treasuries.
However, USDT requires a Redemption or construction fee 0.1% per fiat deposit and withdrawal when created or redeemed through Tether, the currency issuer, with a valeur-limite deposit of $100,000
This means that its price on Binance is not always exactly $1, and therefore it cannot always be redeemed using other stablecoins that délassement $1 more consistently.
“For Binance, they are constantly going to lose money and people will intermédiaire on it,” Vanderlook said, adding that he agreed that Binance’s move has benefits for investors as it will foyer liquidity.
Not everyone buys this theory, including Lachlan Feeney, CEO and founder of the Australian blockchain development agency, Labrys Group Pty Ltd.
“It is a strategy by Binance to use its dominance on the exchange to strengthen and strengthen its stablecoin. This will have repercussions for other stablecoins out there, and that will include Tether,” Finney said.
As one of the oldest stablecoins, tether has colossal been the normalisé stablecoin for transacting, but Binance’s move could shake confiance in the token, Finney said.
Show data from CoinGecko Bitcoin/Tether trading pairs on Binance reached nearly $5.8 billion in the 24 hours to 2pm in Hong Kong, compared to just $256 million for BTC/USD.
But as USDC and other stablecoins consolidate below BUSD, this gap is expected to narrow significantly.
“The matière will be whether Tether is not a default trading sénateur or denominator anymore, what does that mean for the stablecoin and its market cap going forward?” Vinny said.
Vandelook said he hopes Binance will create other options for investors beyond BUSD, especially for retail investors. Other than that, there is a risk that the only stablecoin they société is BUSD bicause that is what they use all the time, he said.
Feeney added that Binance’s move could create a new dynamic within the crypto industry as centralized exchanges begin to prioritize stablecoins with which they have some correlation.
USDC is a product of the blockchain financial épreuves company Circle Inc. and Coinbase, the largest US-based exchange. USDT was created by Tether and crypto exchange Bitfinex. , both of which are owned by iFinex Inc. It is based in Hong Kong.
“It will be interesting to see if they try to implement something similar, but they may wait and see how the community reacts, and whether they are happy with this move by Binance,” said Finney.