Binance pushes out USDC in aggressive move to boost its own stablecoin

From the Editor’s Desk

Dear Reader,

“Survival of the fittest” is a creed that appears to have found favor at Binance this week. Or, perhaps, “survival of the most powerful,” which seems to be the real message coming from the world’s largest cryptocurrency exchange.

Binance’s move to toss USD Coin (USDC) off its platform is a bold gambit to boost the fortunes of its own stablecoin, Binance USD (BUSD) — the third-biggest stablecoin by market cap, following USDC in second place and Tether in the top spot. And the fact that it comes amid reports that Binance is undercutting the fees charged by its main exchange rival, Coinbase — the second-largest crypto exchange in the business — suggests that Binance is making a concerted push for next-level dominance of the crypto space.

If some of this feels familiar, look no further than Google, a company whose control of the search engine market is so complete that it’s unremarkable to anyone that its name is also now a verb.

A decade ago, U.S. Federal Trade Commission officials concluded that Google had engaged in anticompetitive practices and abused its monopoly power in a way that harmed both rival businesses and the interests of internet users. The officials’ recommendation to sue Google was, however, dropped by the commission’s leadership, and their report was buried, only to surface accidentally three years later.

Google may have gotten off the hook, yet one might wonder whether antitrust authorities at the commission and elsewhere could now start looking at Binance as closely as they once looked at the world’s dominant search engine.

The crypto space may still be relatively unregulated in terms of its financial mechanisms, but regulation around competition is well established, proven effective, and enforced constantly. Amid such strong-arm tactics as we’ve seen from Binance this week, the bigger point is who has ultimate control over the choices consumers have. In this case, is Binance’s move counter to the decentralized ideals of individual control and choice?

The rules of engagement should still apply if free and competitive markets are felt to be at risk of potential monopolization.

And beyond that, perhaps an even greater potential foul is the way in which Binance’s move might reflect on the industry more broadly. It’s one thing to provide incentives and a market for people to use your stablecoin in preference to those of rivals, but it’s quite another to do so in such a forced fashion and with nary a word to those same people in the first place. 

In a sector as young as this one, the behavior of just one player can have a disproportionate effect on the entire market. There’s plenty of real estate in crypto for fair competition that spreads the benefits of this always-innovating industry.

Until the next time,

Angie Lau,
Founder and Editor-in-Chief
Forkast

Forkast.Insights | What does it mean?

Binance has never shied away from taking bold steps to boost its own products. When it announced a launchpad to bootstrap crypto startups, investors looking to back early-stage projects had to buy Binance token BNB. That was the catalyst that propelled BNB to 1,300% growth last year and become the world’s third-largest cryptocurrency (it has since slipped back to being the fifth-largest).   

But this week’s move to forcibly convert all holdings of a rival stablecoin in favor of its own coin is unprecedented. USDC has become increasingly powerful as it has positioned itself as the on-ramp for institutional investors looking to dabble in crypto markets. 

USDC is regulated in the U.S., and it has made significant inroads into the offerance of treasury services for startups, capitalizing on emerging financial infrastructure. These factors have allowed USDC to leapfrog over both BNB and BUSD in the market cap rankings, and many market observers believe it could overtake Tether. Binance’s response speaks for itself. 

Binance may be the world’s largest crypto exchange by volume, but USDC will likely survive its eviction just fine, even if a bit bruised. However, for smaller projects on Binance’s platform, the exchange’s sudden ejection of rival coins should be cause for wariness and concern.

Forkast.Insights | What does it mean?

The Lightning Network has long been held out as Bitcoin’s great hope, even though the network has made few gains in its utility, choosing instead to remain doggedly loyal to the original cryptocurrency created by its pseudonymous creator Satoshi Nakamoto. 

Lightning is an attempt to modernize Bitcoin by taking transactions off the Bitcoin network and using the Bitcoin blockchain only as a settlement layer when two parties have completed transacting with one another. It’s a nice idea in theory, but it has created an overly-complex network that is prone to failures.

Saylor’s cheerleading for Lightning will no doubt be a boon for diehard believers in the technology, but the reality is that Bitcoin’s role as the foundation for crypto transactions is changing. Tether now handles the bulk of daily volume, and BTC’s market cap as a percentage of the total asset class has been in decline for the last three years. 

Saylor is known for being bullish on Bitcoin, and he has bet his company’s fortunes on it. That doesn’t mean everyone else should. 

Forkast.Insights | What does it mean?

STEPN has been busting some bold moves lately. In May, the move-to-earn app said it was banning itself in mainland China and ceasing to provide Global Positioning System and internet protocol location services to users in the country from mid-July. The company said it had never engaged in any business on the Chinese mainland and that its withdrawal came in response to a need to abide by Chinese regulations.

Now, STEPN is jumping into Hong Kong despite a looming licensing regime for virtual asset service providers. The company also appears unswayed by Hong Kong’s increasingly repressive political environment and still-harsh Covid-19 restrictions that have prompted a brain drain and young families leaving the city en masse.

STEPN’s decision to set up shop in Hong Kong at Cyberport, a glitzy government-owned business-incubator office complex, shows that the city is still attractive to some companies if there are enough incentives. Cyberport houses around 800 startups, including blockchain companies like Animoca Brands, which in May last year emerged as its fifth unicorn, according to the business park’s 2020-2021 annual report.

Launched just over a year ago, STEPN saw its native currency, Green Satoshi Token, plunge from an all-time high of US$9.03 in late April to around US$0.20 in mid-June amid the protracted crypto market slump. GST has been changing hands at around US$0.03 over the past week, according to data from CoinMarketCap.

To create a new revenue stream, STEPN set up its own decentralized exchange, DOOAR, in July. In the second quarter of the year, STEPN said it generated a profit of US$122.5 million through its platform fees, following only around US$26.8 million in the first quarter.

STEPN’s leap into Hong Kong has landed the company in the spotlight again. Is it a desperate last dance by a fading star — or will the big move allow the company a fresh start and shake off its doldrums? Only time will tell how the audience will respond.