Coinbase CEO Reveals: Binance Swaps USDC for Alternative Stablecoin in Recent Transaction

During Coinbase’s second-quarter earnings call, CEO Brian Armstrong made intriguing remarks about the USD Coin (USDC) stablecoin, which caught the attention of market participants.

Armstrong mentioned that Binance, another major cryptocurrency exchange, transferred some of its funds from USDC to another stablecoin. Despite this move, the market cap of USDC has remained resilient. The stablecoin USDC is a preferred choice on Coinbase, and the exchange is part of the consortium that owns USDC. On the other hand, Binance, in the past, held significant USDC reserves, but Armstrong’s comments imply that they have converted a portion of those holdings to other stablecoins.

CryptoGrafos reached out to both Coinbase and Binance to verify the information but has yet to receive a response at the time of publication.

According to on-chain data, Binance has recently been converting USDC to United States dollars, leading some market observers to believe it may be moving towards its new stablecoin, First Digital USD (FDUSD).

This is not the first time Binance has converted USDC to other stablecoins. In September 2022, the exchange announced an auto-conversion of user-held USDC on the platform to Binance USD (BUSD), the Binance-branded stablecoin issued by Paxos Trust Company. However, the exchange did not disclose its plans for selling or converting its reserves to other stablecoins at the time.

Binance has been actively seeking new stablecoin alternatives since the New York Department of Financial Services ordered Paxos to halt the issuance of its dollar-pegged BUSD stablecoin. After turning to TrueUSD (TUSD) for a while, Binance faced challenges as TUSD depegged, and its issuance was halted by June 10.

Subsequently, Binance turned to a relatively unknown stablecoin called FDUSD. This new stablecoin, issued by a Hong Kong-based company, has been gaining traction after Binance listed several trading pairs for it, accompanied by zero trading fees.

The rise of FDUSD even drew attention from Paolo Adriono, the chief technology officer of Tether (USDT), who observed that USDT was under pressure, and USDC, its primary competitor, experienced significant redemptions.

USDC, the second-largest stablecoin in terms of market share, was once viewed as the main competitor to the market leader, USDT. However, its market cap has contracted by almost half over the past year, dropping from $44.5 billion at the start of the year to $26 billion currently.

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