Binance CEO CZ: Despite Common Misconception Binance Has Not Stopped Supporting $USDC
Last week, Binance Co-Founder and CEO CZ talked to Ryan Selkis, Co-Founder and CEO at Messari, at Messari’s annual conference Mainnet (September 21-23, 2022) in New York City about fiat-backed stablecoins $BUSD and $USDC.
As you may already know, on September 5, Binance announced that it would no longer support the use of fiat-collateralized stablecoins $USDC, $USDP, and $TUSD for trading, and instead “users’ existing balances and new deposits” would automatically get converted to $BUSD at a 1:1 ratio.
According to a blog post published on September 5 by the world’s largest crypto exchange (by trading volume), “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.“
In its FAQ page for this new feature, Binance said that it had “introduced the stablecoin Auto-Conversion solution” in order to “provide greater trading liquidity and a better user experience.“
Binance pointed out that “this will not affect users’ choice of withdrawal: users will continue to be able to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance.“
On September 21, CZ had this to say to the Messari CEO about the reason for introducing this change:
“Liquidity, If you split into different pairs like through different countries or stuff like that, liquidity is much better when they are combined. When you have a combined order book, the liquidity is much deeper, the slippage is much shallower, you get less of the spikes that you have on graphs. When spikes happen, people may get liquidated.
“So liquidity is actually the best protection for users and that’s the main reason we combine all the stablecoin liquidity into one. And there’s many misconceptions about this announcement. People think we stopped supporting USDC, which is not true. USDC deposits work on Binance and you can withdraw them on Binance. When you deposit, it is converted 1:1 to BUSD, and you can trade just like that.
“So zero loss, slippage, and now you’re trading a combined liquidity pool that’s easiest for people for people to trade. And then, when you’re done trading and you want to withdraw the USD balance, you can withdraw in USDC 1:1 conversion, no loss. So this is the easiest user experience. It was mainly from that optimising that user experience that we did this…
“Will this increase the total amounts for BUSD? Probably yes… BUSD today is smaller than USDC and still smaller than Tether. So we want to provide multiple options for our users, and BUSD is the most fiat-backed stablecoin. Even though it’s called Binance USD, it is actually not issued by us, it’s issued by Paxos, which is a NYDFS-regulated entity and fully-audited. So we just picked one that’s most backed by fiat currency.“