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Comments on the USD Coin ($USDC) stablecoin by the CEO of Coinbase, Brian Armstrong, have sparked interest. In a recent discussion about USDC’s market cap, Armstrong noted that Binance had transferred a portion of its funds from USDC to an alternate stablecoin. Despite this adjustment, the market cap of USDC has held up, showing it might be robust enough to maintain positions.
USDC is the main stablecoin on Coinbase, and the exchange is part of the group that oversees USDC. Previously, Binance also held a sizeable reserve of USDC. However, Armstrong’s comments indicate that Binance has converted a substantial portion of its holdings into different stablecoins.
On-chain data suggests that Binance has recently been converting USDC in exchange for US dollars, leading many to believe that these funds are being directed towards Binance’s newly favoured stablecoin, First Digital USD ($FDUSD). This shift isn’t Binance’s first move away from USDC.
CZ + Sun have been exiting $USDT via $USDC to get USD. Tether can’t redeem billions.
New stablecoins emerge. $TUSD denominated volumes went from 0% to 20% in just a few months. #Binance controls 90% of $TUSD supply. This is very simple.
The cartel is turning. Please advise. https://t.co/T8PLDNfu2n
— Not Tiger Global (@NotChaseColeman) August 4, 2023
Binance’s search for an alternative stablecoin has been ongoing since the New York Department of Financial Services instructed Paxos to halt the issuance of the dollar-pegged BUSD stablecoin. After this, Binance turned to TrueUSD ($TUSD) for a stablecoin. However, because of a depegging issue for TUSD, Binance has adopted the lesser-known stablecoin, FDUSD.
Isn’t it interesting that USDt is being pressured down (slightly, within 10bps, just to push market makers to react), and USDc, the main competitor that you would expect being gaining from the situation, is redeemed heavily nevertheless, while suddenly a competitor born 2 days…
— Paolo Ardoino 🍐 (@paoloardoino) August 3, 2023
USDC, once considered a strong contender to the leading stablecoin USDT, has witnessed a significant decline in its market cap over the past year. Starting the year at $44.5 billion, its market cap has contracted by nearly half, resting at $26 billion at the time of writing. This shift in market dynamics underscores the evolving landscape of stablecoins in the cryptocurrency market.