BUSD vs USDC: Stablecoin battle lines drawn as WazirX joins Binance in auto-converting deposits
Tensions between stablecoins have started to bubble to the surface as WazirX becomes the latest exchange to delist USDC, among other stablecoins, and prioritise Binance USD (BUSD).
The Indian cryptocurrency exchange said it would automatically be converting users’ stablecoin balances into BUSD.
The news comes two weeks after Binance announced it would be integrating a similar auto-conversion mechanism, which will result in the delisting of various pairings on the crypto exchange.
How will it impact investors?
The prioritisation of BUSD has already been put in motion, said WazirX in a statement. It has stopped accepting deposits of USD coin (USDC), pax dollar (USDP) and trueUSD (TUSD).
Withdrawals of these stablecoins will continue until 17:00 IST (UTC +5.5) on 23 September.
The cryptocurrency exchange will delist its spot market pairs that use USDC, TUSDP and TUSD three days later on 26 September at 07:30 IST.
Auto-conversion of users’ funds to BUSD will then take place by or just before 5 October, added WazirX.
Binance’s auto-coverting process
Meanwhile, Binance will not be removing users’ ability to withdraw funds in USDC, USDP and TUSD. However, it will be auto-converting funds in these stablecoins to BUSD on 29 September at 03:00 UTC. In its announcement, Binance said:
It added: “After the auto-conversion is completed, users will be able to withdraw USDC, USDP or TUSD at a ratio of 1:1 from their BUSD balances.”
While withdrawals are still enabled, the cryptocurrency exchange has announced it will cease trading on various USDC, USDP, TUSD and USDT pairings. This will take place either on 26 or 29 September.
The future implications
Both Binance and WazirX said liquidity and capital efficiency were the reasons driving their auto-conversion move. But the move has come under fire with some, including Bloomberg journalist Emily Nicolle, calling it potentially “anti-competitive”.
Some argue this could in fact benefit Binance’s rivals, including Jeremy Allaire, the co-founder and chief executive of Circle, the company behind USDC.
He tweeted: “Given how limited BUSD usage is outside of Binance, this will likely benefit USDC usage as the preferred cross CEX and DEX stablecoin rail. Unless Binance can convince all their competitors to get behind BUSD.”
Sharing some perspective on Binance forced conversion of USDC. Lots of misleading headlines and interpretations. Binance is not ending support for USDC, and change will likely lead to more USDC flowing to Binance. Here’s why. 1/
— Jeremy Allaire (@jerallaire) September 6, 2022
As of 21 September, BUSD had a seven-day trading volume of $62.6bn, almost double that of USDC’s $34.7bn.
Yet Binance’s stablecoin is still lagging behind USDC and USDT in market capitalisation with it ranked sixth out of all cryptocurrencies and third out of all stablecoins.
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