In a recent earnings call, Coinbase CEO Brian Armstrong revealed that Binance, a major cryptocurrency exchange, has moved some of its funds from the USD Coin (USDC) stablecoin to another stablecoin. Despite this, Armstrong noted that the market cap of USDC has remained stable.
USDC is the preferred stablecoin on Coinbase, and Binance was once known to hold a significant amount of USDC reserves. However, it appears that Binance has converted a portion of its holdings to other stablecoins.
This is not the first time that Binance has converted USDC to other stablecoins. In September 2022, the exchange announced that it would auto-convert all user-held USDC to Binance USD (BUSD), its own branded stablecoin.
Since then, Binance has been redeeming USDC for United States dollars, leading many to speculate that it is using the funds to support its newly launched stablecoin, First Digital USD (FDUSD).
Binance has been searching for alternative stablecoins after regulatory pressure forced the halt of the dollar-pegged Binance USD stablecoin issued by Paxos Trust Company. The exchange briefly turned to TrueUSD (TUSD) as a replacement, but TUSD also faced issues and its issuance was halted.
Currently, Binance has turned to FDUSD, a relatively unknown stablecoin issued by a Hong Kong-based company. FDUSD has gained popularity in recent weeks, especially after Binance launched several trading pairs for the stablecoin and offered zero trading fees.
The market cap of USDC, which was once seen as a competitor to the dominant stablecoin USDT, has decreased by nearly half in the past year.
Despite Binance’s shift from USDC to other stablecoins, the market cap of USDC has remained stable.