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Binance to Convert Users’ USDC Into Its Own Stablecoin

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Binance cryptocurrency exchange announced on Monday that it has introduced “BUSD Auto-Conversion”.

The latest program will, therefore, allow customers to convert any existing user balances and new deposits of four stablecoins such as USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD), into its own native stablecoin BUSD, effectively delisting trading of the three rival stablecoins.

The company disclosed the reason behind the move: “In order to enhance liquidity and capital-efficiency for users, Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP, and TUSD stablecoins at a 1:1 ratio.”

Binance further said it will remove and stop any trading on spot pairs, including USDC, USDP and TUSD.

The conversion is scheduled to start on September 29. “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”.

USDC is the second largest stablecoin by market cap at $51 billion, according to CoinMarketCap. Binance’s BUSD stablecoin comes third, with a market cap of $19 billion, while USDP and TUSD are far smaller.

The move will effectively remove direct custody of USDC, USDP and TUSD for Binance’s 120 million users worldwide.

However, the firm said the move will not affect users’ choice of withdrawal. “Users will continue to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance”, the company explained.

The exchange said customers will be able to see the converted balance on their accounts within 24 hours. And further stated that the minimum amount for manual conversion is 1 USDC, USDP, or TUSD while accounts with lower balances auto-convert to BUSD.

Binance also said it may expand or amend the list of stablecoins eligible for auto-conversion.

The exchange further said it will remove the support for USDC, USDP, and TUSD products, including spot trading, futures, and margin lending.

USDC products affected include crypto loans, saving accounts, and DeFi staking subscriptions, which will be closed and liquidated on September 23rd.

The news is met with some scepticism, as some users have faulted the decision to convert rival stablecoins into Binance stablecoin.

“Crypto monopoly 101, Binance will remove $USDC as a tradable asset by Sep 25 to push their $BUSD.” a Twitter user by the name ‘@BloodgoodBTC’ said.

A Circle spokesperson also commented about the development: “Based on market activity, it would seem much of this transition has already passed, and while optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”

Tether (USDT), the largest stablecoin that has a market cap of $68 billion, will remain accessible on the Binance platform.

Stablecoins, a newer breed of cryptocurrency, are gaining popularity for their commitment to minimising the price volatility that has limited the use of Bitcoin and other digital assets as a medium of exchange.

Since Tether (USDT) was launched in 2014 as the first stablecoin, the list has grown to include the likes of USD Coin (USDC), Dai (DAI), True USD (USDT), Binance USD (BUSD), Paxos Standard, Digix Gold, Havven’s Nomin, among others.

Bank of America Says Binance to Benefit from Increased Supply of Its Own Stablecoin

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Bank of America (BAC) has talked about the recent decision by the Binance exchange to convert all existing user balances and future deposits of three stablecoins USD coin (USDC), trueUSD (TUSD) and pax dollar (USDP) into its native Binance USD (BUSD).

On Friday, the bank released its research report pointing out that while Binance’s move may generate limited additional revenue in the short term for the exchange, it could have wider implications in the long term.

The bank said the automatic conversion may increase the supply of BUSD by as much as $908 million, as 1% ($10 million) of USDP’s supply and 2% ($898 million) of USDC’s supply are held on Binance.

The Bank of America acknowledged that the fact that BUSD holds a market capitalization of 19 billion indicates that the stablecoin is not being used regularly throughout the broader crypto ecosystem and therefore, lacks utility.

However, the bank sees the potential for a larger increase in BUSD supply over the long-term as customers become more familiar with the stablecoin and its applications across the ecosystem adding more support for it in an attempt to attract more users.

According to the Bank of America, Binance will benefit from this increasing supply because it is able to invest the additional reserves that will back the stablecoin in cash equivalents like U.S. Treasury and overnight loans secured by Treasury to earn interest income.

On the other hand, the bank said although the implications for USDC are limited, there is the potential for the stablecoin to increase its market share relative to Tether (USDT). This is because Binance users may be more likely to convert BUSD into USDC than into USDT when withdrawing funds.

Tether (USDT), the largest stablecoin by market cap, was excluded from the automatic conversion. USDC stablecoin has a market capitalization of just under US$52 billion, followed by BUSD at US$19.5 billion.

The market leader Tether (USDT), has a market capitalization of US$67 billion, and will still be tradeable on Binance.

Questioning Binance’s Move

Bank of America joins other stakeholders who have recently raised questions about Binance’s decision to stop supporting USDC and other stablecoins on its platform.

On Monday, Binance announced that it would convert customers’ holdings in three rival stablecoins — USDC, Pax Dollar (USDP) and True USD (TUSD) — into BUSD on September 29. As a result, it would remove spot, future, and margin trading with USDC, USDP, and TUSD pairs.

Binance said the decision was designed to “enhance liquidity and capital-efficiency for users.” However, the news was met with skepticism, as some users faulted the decision to convert rival stablecoins into Binance stablecoin.

Concerns have been raised about a possible monopolistic behavior of Binance’s move to sideline other stablecoins in order to promote its own.

But, Circle CEO, Jeremy Allaire, recently backed Binance’s decision, saying that the new change will help USDC become the market’s preferred stablecoin rail for moving funds between centralized exchanges (CEXs) and decentralized Exchanges (DEXs).

Binance-Backed WazirX Exchange to Delist USDC, USDP & TUSD

Indian cryptocurrency trading platform WazirX has announced it will be delisting USD Coin (USDC), USDP, and TUSD in a move that is similar to its so-called parent company, Binance Exchange.

In a Monday update, WazirX said the deposit support for these tokens has already been halted, and that withdrawal support will run from now until 5 p.m, IST on September 23rd.

The exchange said the tokens will automatically be converted to Binance USD (BUSD) and the conversion will run until October 5.

The conversion from USDC, USDP, and TUSD will be on the ratio of 1:1. While the delisting process is billed to continue until September 26, the trading platform said users will still be able to view “their USDC, USDP, and TUSD balances under the BUSD-denominated account balance when the conversion is complete.”

The delisting of the three tokens comes off as regulatory scrutiny mounts, as well as Binance exchange made a similar move in the past month.

The move has been welcomed with dissenting views by industry stakeholders, however, veterans like Jeremy Allaire, the co-founder and Chief Executive Officier of USDC issuer, Circle have backed the exchange, noting among many things that the delisting of USDC may push the stablecoin to become the standard stablecoin rail between centralized exchanges (CEXs) and decentralized exchanges (DEXs).

With WazirX making a similar move from Binance, it is not clear at this time whether the two trading platforms have set aside their differences especially as it concerns the ownership of the Indian offshoot.

During the probe of WazirX over fraud-related cases by the Indian Enforcement Directorate (ED), dust was raised as to the ownership status of the exchange. While there is an understanding that Binance had earlier acquired WazirX based on an announcement dating back to 2019, the trading platform’s CEO Changpeng Zhao in a spat with WazirX’s Nischal Shetty said the acquisition did not pull through.

While the ownership status is yet to be cleared, that WazirX is delisting the top stablecoins on its platform in favor of BUSD shows there is a connection between both entities.

Binance pivots to stablecoins after SEC regulatory action

Binance, the world’s largest cryptocurrency exchange by trading volume, has turned to alternative stablecoins following regulatory action by the US Securities and Exchange Commission (SEC) against its native stablecoin, Binance USD (BUSD). The SEC sent a Wells notice to Binance, alleging that BUSD violates US securities law. The New York Department of Financial Services (NYDFS) also asked BUSD issuer Paxos Trust to stop minting new BUSD, which forced Binance to look for alternative ways to meet its stablecoin needs.

According to on-chain data, Binance has been looking to onboard TrueUSD (TUSD) and support a few decentralized stablecoins. The crypto exchange has already minted 180 million TUSD from February 16 to 24, indicating that it is turning to TUSD to mitigate its stablecoin needs. TrustToken, the operator behind TUSD, has been a Binance partner since June 2019. The partnership allowed Binance to buy TUSD for zero fees and redeem it for fiat currency. In September 2022, Binance auto-liquidated TUSD to BUSD to increase its market share. Now, with the ban on BUSD, Binance is increasingly minting new TUSD.

Binance CEO Changpeng Zhao has said that the exchange will look at other options to diversify its stablecoin away from BUSD after the regulatory actions. Just a couple of weeks later, Binance announced support for the decentralized borrowing protocol Liquity (LQTY) and launched TrueFi (TRU) perpetual contracts. TRU is the native token of the decentralized finance protocol TrueFi for uncollateralized lending.

Decentralized stablecoins, such as TerraUSD (UST), became popular in the crypto ecosystem, with market pundits believing that they would be the next big thing. However, the collapse of the Terra ecosystem in May 2022 changed opinions about the nascent stablecoin concept. The Office of the Comptroller of the Currency used the depeg and collapse of the UST algorithmic stablecoin as an example of stablecoins’ “run risk,” with asset-backed stablecoins also seeing minor depeg events as a result.

Binance’s move to alternative stablecoins and decentralized stablecoins shows the growing importance of these stablecoins in the crypto ecosystem. As regulatory pressure on stablecoins continues to increase, more and more exchanges and issuers are likely to turn to alternative stablecoins to meet their needs. Whether decentralized stablecoins will become the next big thing in the crypto ecosystem remains to be seen, but they certainly offer an interesting alternative to traditional stablecoins.

Binance Replaces BUSD with TUSD and USDT in SAFU Fund

Binance, one of the world’s largest cryptocurrency exchanges, announced on March 17 that it has replaced the Binance USD (BUSD) holdings in its Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT). The move comes in response to Paxos’ recent move to stop minting new BUSD, which has led to the asset’s market capitalization falling. SAFU is an emergency insurance fund established by Binance in July 2018 to protect users’ funds in case of security breaches or other unforeseen events.

Binance committed a percentage of trading fees to grow the fund, which was valued at $1 billion as of Jan. 29, 2022. SAFU’s wallets initially consisted of BNB (BNB), Bitcoin (BTC), and Binance USD, which has now been replaced by TUSD and USDT. Binance assured users that the change would not impact them, their funds would continue to be held in publicly verifiable addresses, and BUSD would continue to be supported. The exchange added that it would closely monitor the fund to ensure that it remains sufficiently capitalized and top it up periodically as necessary using its own funds.

On Feb. 13, BUSD issuer Paxos Trust Company announced it would stop issuing new BUSD effective Feb. 21 in accordance with the directions of and in coordination with the New York Department of Financial Services. Days after reports emerged that United States regulators were scrutinizing Paxos and BUSD, Binance minted nearly $50 million worth of TUSD. The transaction took place on Feb. 16, according to data from Etherscan, and came two days after Binance CEO Chanpeng Zhao mentioned in a Feb. 14 Twitter Space that Binance would look to “diversify” its stablecoin holdings away from BUSD.

With the U.S. Securities and Exchange Commission also taking action against BUSD, some crypto community members have questioned whether stablecoins are the real issue at hand or if it’s actually about Binance, as the SEC didn’t take action against Paxos’ gold-backed stablecoin, Pax Gold (PAXG).

Stablecoins, such as BUSD, TUSD, and USDT, are digital currencies designed to maintain a stable value relative to a reference asset, such as the US dollar. They have become increasingly popular in recent years as a means of facilitating transactions on cryptocurrency exchanges without having to convert to fiat currency, which can be costly and time-consuming.

However, stablecoins have also come under scrutiny from regulators due to concerns about their lack of transparency and potential for use in illicit activities. The recent actions by the SEC and the New York Department of Financial Services against BUSD and Paxos are part of a wider crackdown on stablecoins and cryptocurrency more broadly.

In response, cryptocurrency exchanges and other market participants are looking to diversify their stablecoin holdings to reduce their exposure to any one particular asset. This appears to be the motivation behind Binance’s decision to replace BUSD with TUSD and USDT in its SAFU fund.

TrueUSD (TUSD) Strives to Resume Minting with Prime Trust

In recent updates, the TrueUSD (TUSD) team has announced that they are actively engaged in efforts to resume TUSD minting on Prime Trust. This announcement was made following an unexpected pause in TUSD minting via Prime Trust, an event that took place on June 10.

Displaying their commitment to a seamless user experience, the TUSD team stated on June 13, “We are diligently working towards resuming TUSD minting on Prime Trust. We understand the importance of providing a seamless experience for our users.”

It is important to note that the disruption with Prime Trust has not impacted TUSD minting and redemption services with other banking partnerships. These services continue to operate as per usual, as was clarified by the team in a tweet from June 10.

“TUSD minting and redemption services remain unaffected and will continue to operate as usual,” the TUSD team announced, “We want to assure you that our partnerships with other banking institutions remain intact, allowing for seamless transactions.”

Throughout these developments, the TUSD team has shown a clear commitment to transparency, regularly updating their user base and expressing appreciation for their patience and support. The team has further promised to provide prompt updates as the situation evolves.

“We appreciate the patience and support of our community during this process and will provide updates as soon as new developments occur. Thank you for your trust in TUSD,” they shared on June 13.

Though the temporary pause with Prime Trust operations has introduced some inconvenience, the proactive measures taken by the TUSD team to address and rectify the situation demonstrate their dedication to their users.

TrueUSD's TUSD Circulating Supply Surpasses $3 Billion Despite Prime Trust's Challenges

In June 2023, TrueUSD (TUSD) experienced significant growth and adoption across multiple blockchain ecosystems. With the circulating supply reaching 3,059,838,623 TUSD, backed by dollar reserves of over $3 billion, the stablecoin is gaining more recognition in the crypto markets.

TUSD showed a broad spread across various networks with TRON taking the lead with 2,297,017,674 TUSD, Ethereum trailing behind at 729,591,343 TUSD, and BNB Smart Chain (Native) hosting 30,097,865 TUSD. Avalanche, BNB Beacon Chain, Fantom, Polygon, and several other networks also supported a sizeable amount of TUSD.

TrueUSD’s growing adoption was further evidenced by its integration into different platforms and protocols throughout the month. The Web3 shopping platform, UQUID, adopted TUSD as a payment option on June 5th, providing users with a new method to shop. TUSD was also incorporated into the Megaton Finance on the TON network, broadening its presence in the financial sector.

Binance, the world-renowned crypto exchange, played a significant role in promoting TUSD adoption during June. It initiated a TUSD contract swap on the BNB Smart Chain, and upon its successful completion, launched the 34th phase of new token mining, supporting TUSD mining. Binance’s Auto-Invest platform added TUSD as a payment option, and it supported the swapping of the new native TUSD on the BSC network for TUSDOLD, offering users a seamless conversion process.

Venus recognized the rising importance of TUSD by launching the VIP-129 proposal to support the new native TUSD, and following its approval, the market for the token went live. Additionally, Pancake V3 introduced the TUSD Syrup Pool and Farms, providing users with more opportunities to earn rewards.

TrueUSD’s reach extended to Kraken, another major crypto exchange, which enabled deposits and withdrawals of TUSD on the TRON network by the end of June. Binance further cemented TUSD’s position by launching a zero maker fee promotion for all existing TUSD spot and margin trading pairs and added BCH/TUSD and CFX/TUSD trading pairs to its platform.

Alongside these product developments, TrueUSD made strides in community engagement through various campaigns. Binance C2C and Binance Earn launched time-limited campaigns, offering new users a chance to win up to 175 TUSD. The UquidParty online campaign and PancakeSwap’s TUSDQuiz on Telegram created interactive opportunities for participants to win a share of TUSD prizes.

It’s worth pointing out that, despite TrueUSD’s claim to have launched as the “first USD stablecoin operated by a regulated operator,” it might face certain challenges. TrueUSD’s technology partner, Prime Trust, has been grappling with serious issues. Rumors of insolvency swirled around Prime Trust in early June. This situation escalated on June 22 when the Department of Business and Industry in Nevada issued a cease and desist order against the company. Consequently, Prime Trust abruptly put a stop to all fiat and cryptocurrency deposits and withdrawals.

Nevertheless, TrueUSD denied any impact from the Prime Trust situation. In a recent tweet, the company asserted, ‘Prime Trust has suspended all deposits of fiat and digital assets. However, #TrueUSD (#TUSD) is not affected by this development. We don’t have any exposure to Prime Trust and maintain multiple USD rails for minting and redemption. Rest assured, all your funds with TUSD remain secure.’

TrueUSD Partners with Alchemy Pay to Facilitate Direct Crypto Purchases in 173 Countries

Alchemy Pay, a leading fiat-crypto payment gateway founded in Singapore in 2017, has partnered with TrueUSD (TUSD), a transparent stablecoin fully backed by the USD. Alchemy Pay connects crypto with traditional fiat currencies, offering solutions such as On & Off Ramp, NFT Checkout, Crypto Card, and Crypto Payments, supporting payments in 173 countries.

This collaboration will offer Alchemy Pay’s On-Ramp solution, making TUSD directly purchasable from Alchemy Pay’s Ramp page. Users from 173 countries can now acquire TUSD using fiat currencies, marking a seamless entry into the TrueUSD ecosystem.

TrueUSD (TUSD) is the first USD pegged stablecoin with live on-chain attestations by independent third-party institutions. It has been listed on over 100 trading platforms and is live on 10+ mainstream public chains, including Ethereum, TRON, Avalanche, BNB Chain, Fantom, and Polygon. TUSD is attested in real-time by The Network Firm LLP, an independent CPA firm, and integrated with Chainlink’s Proof of Reserve to secure minting and ensure transparency and reliability. TUSD was granted statutory status as an authorized digital currency and medium of exchange in the Commonwealth of Dominica on October 7th, 2022.

Alchemy Pay’s Commitment to Crypto Adoption

Alchemy Pay’s network, with over 300 fiat payment channels across 173 countries, is dedicated to simplifying the crypto onboarding experience. The company’s efforts in obtaining licenses to operate payment services in countries like Canada, Indonesia, and Lithuania demonstrate its proficiency in the crypto payment industry.

The Ramp provided by Alchemy Pay integrates effortlessly with platforms such as DeFi protocols, NFT marketplaces, and exchanges. It enables easy crypto purchases using credit and debit cards, mobile wallets, and bank transfers. Additionally, Alchemy Pay’s Ramp offers a user-friendly offboarding experience, supporting transactions to bank accounts in more than 50 fiat currencies through remittance partners.

TrueUSD’s Transparency and Accessibility

TrueUSD is recognized for its 24-hour live on-chain attestation, prioritizing transparency, security, and stability. After integrating with Chainlink, TUSD became the first USD-backed stablecoin to utilize Proof of Reserves for secure minting. It is now natively available on various blockchains, including BNB Chain, Ethereum, TRON, and Avalanche, and has expanded to other public chains.

This integration between TrueUSD and Alchemy Pay may signify a substantial step in fostering greater connectivity between everyday people and the thriving crypto industry. By bridging the gap between fiat and crypto, it opens new avenues for users and contributes to the broader acceptance and utilization of cryptocurrencies.