Binance bans USDT & Co.: These stablecoins will soon no longer be tradable!

Binance bans USDT & Co. – These Stablecoins Will Soon No Longer Be Tradable

The world’s largest crypto exchange Binance is banning deposits of several stablecoins, including USDT. Trading will also be significantly restricted. What is behind this?

Binance has made a remarkable decision in the world of stablecoins. As announced by Binance, USDT, USDP, and TUSD will no longer be eligible for deposits starting on September 1st. Spot trading for these three widely used stablecoins and their derivatives will be canceled on September 7th. Binance urges customers to convert deposits in USDT, USDP, and TUSD into BUSD, Binance’s proprietary stablecoin.

Background on the Binance Decision for Stablecoins

Binance’s decision to ban certain stablecoins is noteworthy because USDT alone significantly shapes the market. Tether (USDT) is by far the most used stablecoin, not only on Binance. The official message is that Binance wants to increase liquidity and capital efficiency on the exchange through this move. It further states that holdings of USDT, USDP, and TUSD that are still available on Binance on September 7th will be automatically converted to BUSD.

There is speculation whether Binance wants to increase the dominance of its own stablecoin BUSD by drastically cutting back USDT, USDP, and TUSD trading. Binance’s decision also underscores the influence of the largest crypto exchange, which can make market-determining decisions autonomously and in its own interests. BUSD receives support from Binance to become the primary stablecoin on its internal platform.

What Does the Binance Ban on USDT & Co. Mean?

The consequences of Binance’s decision primarily affect users of the platform. They will need to exchange their USDT, USDP, and TUSD for BUSD. It’s possible this will result in reduced volumes for USDT, USDP, and TUSD due to the significant size of Binance. Stablecoins are used in trading as a means to quickly react to market movements, making liquidity also an important factor for traders.

For Binance users, it is advisable to be proactive regarding the conversion of USDT, USDP, and TUSD into BUSD by September 7th. This is to avoid any conversion backlog. It remains to be seen whether other major exchanges might follow Binance’s example and whether this decision might trigger significant shifts in the stablecoin market.