Conversions from USDC stablecoin to Binance’s own stablecoin BUSD have already begun, and the effects on the cryptocurrency market are already being felt.

Since the announcement by exchange Binance that it would discontinue support for competing stablecoins on its platform, Binance’s USDC outflows — that is, the number of USDC stablecoins leaving the platform — has increased by 93%. Meanwhile, the market capitalization of the USDC token dropped by 5%.

As of Wednesday, Binance held $26 billion worth of stablecoins, according to blockchain analytics firm Nansen. Of that total, $20 billion was in BUSD, with the rest in competing stablecoins: $683 million in USDC; US$48 million in USDP; and US$ 283 million in TUSD.

The only other sizable stablecoin balance on Binance was $5 billion in Tether (USDT), according to Nansen.

Since the beginning of the week, users could convert their stablecoins to BUSD at a rate of 1:1. But as of Thursday, the exchange said it will automatically convert any remaining USDC, USDP, and TUSD balances into its own stablecoin.

While Binance’s announcement mentioned three of its competitors, much of the attention has been on USDC. It is the second largest stablecoin by market cap and has consistently outperformed BUSD.

Neither Binance nor USDC issuer Circle responded to a request for comment from Decrypt. However, there are still signs in the platform data that show how conversions have already impacted the stablecoin landscape.

Stablecoin Monopoly

When Binance announced the move earlier in the month, it created a lot of buzz. That’s because the cryptocurrency exchange is by far the largest by volume, having made $23 billion in transactions the day before.

When the announcement was made, Twitter user “BloodgoodBTC” likened it to a cryptocurrency monopoly, saying the exchange was “excluding competitors like Google did 10 years ago.”

Meanwhile, well-known Tether and Bitfinex critic “Bitfinexed” hypothesized that conversions should show a drop in USDC issuance and an increase in BUSD issuances.

Since both stablecoins must maintain a 1:1 peg to the US dollar, and both Paxos (issuer of Pax Dollar) and Circle (USDC) burn coins as they are redeemed, their issuance can be approximated using their capitalization of Marketplace.

Thus, the USDC market cap has dropped to $49 billion since Binance’s announcement earlier this month. Over the same period, BUSD’s market cap rose 8% to $21 billion, according to CoinGecko.

Both Binance CEO Changpeng CZ Zhao and Circle CEO Jeremy Allaire were adamant that automatic conversions do not amount to a delisting from USDC.

In turn, CZ said on Twitter that users can still deposit and withdraw USDC from the exchange. “Best price, smallest price difference for all users,” he said.

Separately, Allaire said, also in a Twitter thread the day after the announcement, that the move “will likely lead to more USDC flowing into Binance.”

And it took a side swipe at competitor Tether, tweeting that “USDT is NOT equivalent to cash – not even close.” He also argued that since the use of BUSD outside of Binance is so limited, this would make USDC the preferred stablecoin for moving funds between centralized and decentralized cryptocurrency exchanges.

market changes

BUSD is primarily traded on Binance, according to data from CoinGecko. The three most popular BUSD trading pairs are Bitcoin, Ethereum, and Tether on Binance’s own exchange and account for 65% of all stablecoin volume.

Meanwhile, centralized exchange MEXC Global’s BTC/USDC trading pair is the most popular market for the stablecoin, accounting for $747 million, or 17%, of USDC volume. And the BTC/USDC trading pair ceased on Binance represents 4% of USDC volume, according to CoinGecko.

There were also signs of change in the exchange’s outflows, according to blockchain data firm IntoTheBlock. After Binance’s announcement, Binance’s USDC outflows increased.

Binance’s USDC outflow volume increased by 93%, from $158 million at the end of August to $307 million. And the outbound transaction count has increased by 77%, from about 1,100 to about 1,800 transactions, according to the data company.

This brings September’s cumulative total to $19 billion across 44,314 transactions, up from $18 billion in August.

Those outputs, said Lucas Outumuro, head of research at IntoTheBlock, could be from users who don’t want to have their USDC converted to BUSD.

“As far as I know, Binance is not actually converting them, so it’s not like they’re pulling USDC from clients and sending BUSD entries,” he said.

It is likely to increase BUSD’s liquidity in the long term, leveraging Binance’s strength position. In the short term, it might not make that much of a difference, as, as mentioned, Binance is not actually converting the assets.

But to put the outflows into perspective, it is a modest increase compared to the amount of USDC that was being transferred from Binance in May and June.

Data from IntoTheBlock shows that these two months were the highest and second highest months for USDC outflows from Binance since 2018, when the exchange added the stablecoin.

Users withdrew $50 billion in USDC from the exchange in May and $30 billion in June, while the collapse of TerraForm’s algorithmic stablecoin TerraUSD and governance token LUNA rocked the market.

* Translated with permission from

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