In summary
- Binance adopted USDC as its main stablecoin, strengthening its treasury and trading capabilities.
- The alliance with Circle seeks to drive global adoption of the stablecoin in payments and savings.
- Critics warn that the decision prioritizes regulation over decentralization in the crypto ecosystem.
Leading Cryptocurrency exchange Binance has partnered with American stablecoin issuer Circle to accelerate the adoption of the USDC stablecoin.
The two companies announced their collaboration at Abu Dhabi Finance Week on December 11, and said they look forward to “supporting the development of the global crypto ecosystem and broader financial services.”
The cryptocurrency exchange plans to extend the availability of USDC on its platform for trading, savings and payment applications.
Binance and Circle did not respond to Decrypt’s request for comment at the time of publication.
Additionally, Binance will adopt USDC as the primary stablecoin in its treasury—a move described in the announcement as “a powerful signal about the world moving on-chain.” Circle, for its part, will provide Binance with the necessary technology and liquidity to improve its services.
The announcement follows leading stablecoin issuer Tether’s decision to halt the issuance of its euro-backed stablecoin, EURT, due to regulatory pressure from the EU in November.
According to a September report from consumer protection group Consumers’ Research, Tether’s world-leading dollar-backed stablecoin USDT is characterized by a lack of transparency around issuer Tether’s US dollar reserves.
USDT is “a consumer disaster waiting to happen,” according to the organization, primarily due to the lack of a full audit of dollar reserves by a reputable accounting firm. With the adoption of the Market Regulation in Cryptoassets (MiCA) framework by the European Union, Binance and other exchanges could be forced to exclude Tether stablecoins.
Circle, on the other hand, secured a valid MiCA license this summer—offering Binance access to a stablecoin that could end up being crucial to serving the EU market. The exchange has history with its own stablecoin. In 2023, it was forced to phase out its Binance USD (BUSD) stablecoin last year due to regulatory pressure.
Binance’s stablecoin partner for the issuance of BUSD, Paxos, had been investigated by the United States Securities and Exchange Commission (SEC) over the project. While the SEC took no enforcement action, the issuer was ordered to stop issuance of BUSD by the New York Department of Financial Services.
Gitay Shafran, founder of the decentralized finance ecosystem behind the FUSD stablecoin TheFedz, told Decrypt that “the stablecoin market is heading in a worrying direction, and Binance’s decision to pivot from supporting its own ecosystem to Circle’s USDC is a clear example of why.” Additionally, he raised issues with cryptocurrency companies noting that he is “playing nice with regulators at the expense of decentralization.”
“Binance seems more interested in saving itself than defending the open values that built the crypto community. And Circle? They’re not just complying with regulations. They’re using them as a weapon to crush competition and entrench their dominance,” he stated. “I think Circle’s strategy with USDC is about building walls, not bridges,” he concluded.
Shafran believes that “as users, we need to actively support other stablecoin options and push protocols to integrate and promote a wider range of options.” He believes that users should experiment with decentralized options and support projects that innovate and compete with major players, protocols “have a responsibility to avoid centralizing liquidity around a single issuer.”
Editor’s Note: Story updated to add comment by Gitay Shafran
Edited by Stacy Elliott.
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