Binance, the world’s largest crypto platform, has just taken a decision that is roiling the industry.
While autumn hasn’t even started, the crypto industry is desperately hoping for an end to the crypto winter.
Bitcoin prices surely provide no answers for investors. The most popular cryptocurrency has fallen below the symbolic threshold of $20,000. Mercifully for the bitcoin longs, it does not stray too far from this level.
Adding to the confusion is ether, the native token of ethereum, which some call the internet of the crypto industry.
Indeed, almost all crypto uses, including decentralized finance apps (dApps) and nonfungible tokens (NFTs), are created on ethereum. But in mid-September that platform will see an update, called the Merge, which will have important consequences for the entire crypto industry.
The closer investors get to the Merge, the more they wonder whether the update will truly boost the cryptocurrency market, which is currently valued at $1.05 trillion, a third of its all-time high set in November 2021.
And if all this were not enough to preoccupy investors — who are also wondering about the various hacks affecting crypto firms — a decision by Binance, the largest cryptocurrency trading platform, has taken them by surprise.
Binance Delists Stablecoin USDC
Binance, founded by the billionaire Changpeng Zhao in 2017, will transfer all funds held in certain stablecoins to the stablecoin that it offers.
Specifically, from Sept, 29 all funds held in USD Coin (USDC), Pax Dollar (USDP) and TrueUSD (TUSD) will be automatically invested in BUSD, the stablecoin Binance offfers.
Customers will be able to continue to withdraw money in USDC, USDP and TUSD.
And their funds won’t decrease in value because the principle behind stablecoins is that their prices should track the dollar or another fiat currency.
The decision does, however, banish USDC, the world’s second largest stablecoin with a CoinGecko-measured valuation of $52 billion at last check, from the world’s largest crypto platform.
For the stablecoin market, this means that Tether (USDT), the first stablecoin, with a market value of $67.5 billion, will remain the leader. And Binance’s stablecoin (BUSD), which currently has a market value of $19.3 billion, will gain market share.
Institutional Investors May Be Affected
BUSD is the world’s third largest stablecoin, while USDP and TUSD are small players.
“Users are strongly advised not to add positions during the conversion period to avoid any potential losses,” Binance warned in its statement, which you can read here. “Binance is not liable for any losses for new positions during this period that may incur due to the conversion of funds.”
The platform explains that its decision to abruptly eliminate a competitor stems from its desire “to enhance liquidity and capital-efficiency for users.”
For many retail investors, Binance’s decision to no longer support USDC will not really matter because it is institutional investors who rely heavily on stablecoins for sophisticated financial operations or to quickly move large sums of money.
But the problem is that the crypto industry promises to democratize finance, and Binance’s decision seems to go against this promise.
TheStreet, Inc. All rights reserved. Action Alerts PLUS is a registered trademark of TheStreet, Inc.
This story was originally published September 6, 2022 12:12 PM.
Read the full article here