Binance With USDC Circle

Circle and Binance have entered into a strategic partnership aimed at accelerating global USDC adoption. Through this partnership, Binance will make the second-largest stablecoin more extensively available across its products and services, including more USDC trading pairs and special trading promotions. In return, Circle will bring its technology and liquidity to the platform. 

Binance will also adopt USDC as "a vital dollar stablecoin" for its own corporate treasury. A Binance spokesperson declined to disclose the exact amount of USDC the firm plans to hold, stating that the stablecoin will be added “over time.”

Circle is usually associated with Binance’s closest rival, Coinbase. In 2018, Circle and Coinbase jointly launched its main product: USDC stablecoin. In 2023, Coinbase acquired an equity stake in Circle and now has a revenue-sharing agreement by which it takes part of the interest income from USDC reserves. Although not confirmed, Binance may also profit from holding USDC in its treasury or on its platform.

Together On the Way To Compliance

Compliance has always been a part of Circle's business strategy in the U.S. and abroad. Its French subsidiary became the first global stablecoin issuer to achieve compliance with the looming MiCA framework, unlike Tether, which is set to be delisted in Europe by the end of the year as it lacks the necessary license.

Binance, on the other hand, started out a little wild but also adjusted its strategy after multiple compliance probes by regulators.

Although Binance has abandoned most of the EU due to mounting regulatory pressure, it is still licensed in six member countries, including France, Spain, and Poland. Even though the announcement doesn’t directly mention Circle’s euro-backed stablecoin, the exchange is likely interested in the partnership with EU-authorised Circle as it seeks to enforce its legal ‘residence’ on the European market. 

“As Binance itself becomes one of the most widely regulated global exchanges, and continues to invest in robust compliance and risk management infrastructure, the marriage of the largest and fastest growing compliant stablecoin with their global platform marks a major and material shift in the emerging crypto market structure,” - shared Jeremy Allaire.

Can USDC beat USDT with Binance?

Stablecoin adoption is gaining momentum and issuers are using different strategies to win the game. Some of them, including Circle, have recently introduced additional incentives such as interest paid on the stablecoins held in certain wallets.

However, the only effective path to user adoption for any stablecoin is through increasing its circulation. In this regard, Binance, with its global user base, is the ultimate partner.

This is not the first time Binance has promoted a stablecoin. Previous campaigns seemed successful, but then Binance would shift its attention to other tokens. Some of the old favorites gave up and left the scene or ended up with unwanted attention from the SEC.

For example, BUSD, issued by Paxos with branding support from Binance, reached a market cap of an astonishing $23 billion and became one of the leaders in the stablecoin wars.

But then, the exchange began to get rid of BUSD in response to an SEC warning, and switched to backing TrueUSD. The capitalization of a practically unknown token grew by over 300% within months. The ‘Binance effect’ pushed a significant increase in its popularity and the primacy of stablecoin in a trading pair with BTC. The market cap went downhill when Binance reinstated fees and the coin depegged after being excluded from Binance Launchpool.

Concerns were raised over TUSD, a stablecoin linked to Justin Sun, ever since it rose to prominence. When the SEC’s investigation showed that 99% of its backing assets were invested in a high-risk fund, it completely lost its appeal.

FDUSD became the next favorite.  The story was all the same: the tiny stablecoin skyrocketed due to a zero-fee promotion. Now, its supply is gradually declining.

 "Our users want choices. We always work with multiple stablecoins. Today we support USDT, USDC, FDUSD, and a bunch of others. And we will continue to work with multiple stablecoin issuers or creators,” - a Binance spokesperson told Coindesk when asked if this was a conscious choice to be more compliant with regulations.

Now, with support from two major exchanges, Circle has another advantage in the stablecoin race, potentially leveraging Binance’s scale and worldwide reach to compete with Tether. So far, USDT is an undisputable leader, with around $140 billion in circulation compared to that of $40 billion of USDC.