Tuesday, the CEO of Circle suggested that impending developments at Binance would make USDC the preferred stablecoin rail between centralized exchanges (CEXs) and decentralized exchanges (DEXs). According to Allaire, the development is not only advantageous for Binance but will ultimately increase the utility and uptake of USDC.
Aside from enjoying more liquidity and utilization outside of Binance's exchange, USDC has a larger market cap than BUSD.
Allaire, however, is confident that the latest adjustment will assist USDC in becoming the market's preferred stablecoin train for transferring money between centralized and decentralized exchanges.
The biggest stablecoin in the world, Tether (USDT), was not included in the consolidation proposal by Binance. The exchange will continue to accept stablecoin trades.
The exclusion of USDT from Binance's plans was justified by two factors, according to Allaire. First, the CEO said that switching to BUSD would have been too problematic due to Binance's present USDT liquidity. And second, he claimed that USDT is “not even close” to meeting the criteria for becoming a cash-equivalent asset.
The justifications put out by Allaire attempt to address accusations of Tether for using shaky backup assets to underpin its stablecoins.
Allaire's statement came after Binance revealed on Monday that starting on September 29, 2022, it would automatically convert all of its customers' present funds held in stablecoins (USDC, USDP, and TUSD) towards Binance USD (BUSD). Thus according Binance, the action will improve users' access to cash and liquidity.
The choice, meanwhile, raises some concern about the potential predatory practices. Some consumers think Binance's decision was intended to decrease the trading volume of USDC while also increasing the usefulness of its BUSD stablecoin.
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