Binance and Circle put their rivalry aside and formed a strategic partnership to strengthen the stablecoin USDC and compete with market leader Tether.
• USDC is the largest stablecoin in the world after Tether
• Binance and Circle collaborate to strengthen USDC
• Market leader Tether in sight
USDC is the largest stablecoin after Tether
USDC is a stablecoin pegged to the value of the US dollar and is issued by Circle. As Coinbase explains, stablecoins are intended to reduce price fluctuations by pegging the value of cryptocurrencies to more stable assets, usually fiat currencies. With a market capitalization of $45.79 billion, USDC is the second-largest stablecoin after Tether (USDT) and ranks as the eighth-largest cryptocurrency globally, according to data from CoinMarketCap. The market capitalization of Tether – the fourth largest cryptocurrency in the world – is currently $137.35 billion (data as of January 6, 2025).
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Binance and Circle set aside rivalry for strategic alliance
Binance and Circle, two major players in the cryptocurrency industry, have recently put aside their rivalry and announced a strategic partnership to promote the stablecoin USDC. USDC, which is backed by the US dollar at a 1:1 ratio, is jointly owned by Circle and Coinbase.
Binance, once a leader in the stablecoin market with its BUSD stablecoin, was forced to discontinue it at the end of 2023 due to regulatory pressure. Circle had previously criticized Binance and Tether for their lack of compliance.
“Binance has been deeply transforming its business, and over time we agreed that it made sense to bring together one of the most trusted and highly regulated stablecoins in the world,” Circle Chief Business Officer Kash Razzaghi tells Fortune.
Circle has apparently resolved its long-standing conflict with Binance in order to benefit from its extensive network and attract new customers for USDC. In return, Binance could rely on Circle’s strong relationships with US authorities and other regulatory bodies to expand its position in the stablecoin market.
“Through this partnership, Binance will make USDC more widely available across its entire range of products and services, ensuring that its more than 240 million users worldwide can seamlessly access and use USDC for trading, savings and payment applications,” said Circle CEO Allaire via X
BREAKING NEWS: Circle and Binance have entered into a strategic partnership that will accelerate global USDC and crypto adoption. The world’s largest exchange and crypto super app and the world’s largest trusted and compliant dollar stablecoin operator are coming together to… pic.twitter.com/WO8w4rv3NZ
– Jeremy Allaire – jda.eth / jdallaire.sol (@jerallaire) December 11, 2024
“We are pleased to see more partners like Binance contribute to the growth of the USDC ecosystem. As the list of USDC ecosystem partners expands, USDC circulation will continue to increase, helping to increase economic freedom around the world and the industry based on transparency and trust,” Shan Aggarwal, VP and head of business development at Coinbase, told Fortune.
Binance will not acquire any equity stake in Circle as part of the new partnership with Circle and Coinbase, but will share USDC revenue with both partners in the future. However, the exact distribution of the proceeds remains unclear.
Can USDC compete with Tether?
This collaboration between the parties comes as stablecoins are becoming increasingly important in mainstream finance and competition with market leader Tether continues to grow.
The stablecoin landscape is evolving rapidly and is characterized by regulatory changes and growing competition. However, with the new alliance between Binance and Circle, USDC could gain further importance.
While Tether continues to face criticism for its lack of transparency, Circle and USDC benefit from their good relationships with US authorities, making them more attractive to risk-averse financial firms. At the same time, stablecoin issuers are facing increasing competitive pressure, not only from Tether but also from new initiatives, according to Fortune.
Additionally, regulatory challenges, such as non-compliance with EU MiCA regulations, create opportunities for Tether competitors such as USDC, Cryptopolitan explains.
The Binance-Circle alliance could certainly challenge Tether, but remains active in a market that may be large enough to allow multiple players to grow, Fortune added. Whether USDC or another challenger can compete with Tether’s dominance remains to be seen.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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