Circle, the issuer of U.S. dollar-pegged stablecoin USDC, has said that stronger competition in the stablecoin market is likely to pressure Circle stablecoins, thereby slowing its growth and weighing on the financial outlook of the company. 

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Fast facts

  • Circle said in a filing to the U.S. Securities Exchange Commission on Nov. 14 that crypto exchange Binance’s auto conversion of USDC into BUSD held in Binance wallets has reduced USDC circulation in the quarter ended Sept. 30. 
  • Circle, the issuer of the world’s second-largest stablecoin, estimates that Binance’s auto conversion accounted for up to US$3 billion of the US$8.3 billion decline in USDC in circulation during June 30-September 30. 
  • Other reasons for the decline in USDC in circulation, according to Circle, include lower cryptocurrency prices, the collapse of large crypto businesses such as FTX, Voyager Digital and Celsius, as well as higher interest rates that have prompted stablecoins to move into U.S. Treasuries, money market funds and other traditional investment products. 
  • Binance, world’s largest crypto exchange and the issuer of the world’s third-largest stablecoin BUSD, announced in September that it would convert customers’ holdings in three rival stablecoins – USDC, Pax Dollar (USDP) and True USD (TUSD) – to BUSD. 
  • The recent collapse of FTX also exposes the contagion risks to the broader crypto market, Circle said in its filing.
  • “If Circle stablecoins do not grow as we expect, our business, operating results, and financial condition could be adversely affected,” the company said.

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