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Coinbase CEO Brian Armstrong’s response to a question about USD Coin during the company’s second-quarter earnings announcement drew attention to some of his statements. When commenting on the market value of USDC, Armstrong mentioned that Binance had moved some of its funds from USDC to another stablecoin, but he also emphasized that the market value of USDC was maintained.
“In fact, Binance moved some of its funds from USDC to another stablecoin. I believe our data over the past six or seven weeks clearly shows that the market value of USDC has increased. This is an important data point.”
Binance’s New Preference
USDC is the preferred stablecoin on Coinbase and the cryptocurrency exchange is a member of the consortium that owns USDC. Based on Armstrong’s comments, it appears that Binance has converted some of its assets from USDC to other stablecoins.
According to on-chain data, Binance has been using USDC for trading against the US dollar, and many market observers believe this indicates a shift towards a new stablecoin called First Digital USD (FDUSD).
What is the Stablecoin Strategy Based on?
This is not the first time Binance has converted USDC to other stablecoins. In September 2022, the cryptocurrency exchange announced that it would automatically convert all user USDC holdings to Binance USD. At that time, the exchange did not disclose whether it planned to sell its reserves or convert them to other stablecoins.
After the New York Department of Financial Services ordered Binance to cease issuing the BUSD stablecoin, which is pegged to the US dollar, the exchange has been searching for new stablecoins. Binance then turned to TrueUSD (TUSD) to reduce its stablecoin needs, but the value of TUSD declined and its issuance was halted on June 10th.
Since then, Binance has turned to another relatively unknown stablecoin called FDUSD. The new stablecoin, issued by a Hong Kong-based company, has gained significant attention in recent weeks, particularly with Binance offering zero transaction fees for FDUSD along with several trading pairs.
The rise of FDUSD even caught the attention of Paolo Adriono, the Chief Technology Officer of Tether, who mentioned Tether’s pressure and its main competitor USDC in a tweet.
USDC is the second-largest stablecoin by market share and has been seen as a real competitor to the former market leader, USDT. However, last year, the market value of USDC nearly halved, dropping from $44.5 billion at the beginning of the year to $26 billion at the time of writing this article.
