FT Cryptofinance: Binance lets his muscles play

Hello and welcome to the FT. This week we are talking about Binance, which, like your standard technology giant, is from the Silicon Valley.

crypto is full of promises about a future financial system that protects the freedom of an individual where he wants to park his money, and the liberation from the binding to an almighty third party.

For some, Binance, the largest crypto exchange ever, has deepened this narrative this week. On Monday, Binance said that it would automatically convert the USDC stable, which is operated by Circle, into Binances own native stablecoin, Busd.

Binance said it would do the same for deposits of smaller stable coins USDP and TUSD. Last but not least, it will also remove certain spot trade pairs of competing stablecoin providers Tether and Paxos from its platform.

According to Binance, users can continue to withdraw money in USDC, USDP and TUSD. Nevertheless, customers will no longer be able to act as freely as before. The change takes place at the end of the month.

stable coins are the fuel of the cryptoma market. They are usually linked to the largest and most stable currencies in the world and act as a bridge between crypto and traditional markets. Holding assets as stable coins makes dealers faster and easier to buy and sell digital tokens.

Binance said that his decision was to improve the "liquidity" for the users. The step should make the market deeper and liquider by consolidating the trade around a stablecoin - its own.

paxos said a positive step for the security of his customers. Circle thought it was a simpler commercial decision, since his StableCoin USDC was increasingly actively actively acted with Binance in addition to his own stable coin. Jeremy Allaire, CEO of Circle, said that Binance's step "would probably not work for a regulated market in the USA and certainly not how I would be dealt with with it", but added that it could do USDC "attractive" . Binance said the step was discussed and agreed with Circle/USDC and other third parties before the decision was made.

Apart from the entertaining dispute between the company, Binance's decision makes the core of a delicate problem for crypto. The vision of a decentralized marketplace where customers can act freely and seamlessly or move their funds from one place to another becomes irrelevant when it comes to large sums of money and competing marketplaces.

"It is more of a competitive story, Binance feels a bit of heat from other players and wants to create space for himself and delimit its system," Ilan Solot, partner at the risk capital company Tagus Capital.

"There is such a tendency towards centralization for anyone who actually tries to do anything," Angel investor and crypto skeptic Liron Shapira and added that decentralization was a "purely idealistic goal that sounds good but actually does not matter".

Some still see the departure from decentralization as mortal sin.

"This step by Binance is shameful and completely contradicts the ethos of what crypto stands for," said Charles Storry, Head of Growth in the decentralized crypto index platform Phuture, this week.

But where the step of Binance may have heated up the industry, she is increasingly reacting with a shrug. "I think that most of the actors in the industry now accept that decentralization is a spectrum," said Solot.

Binance used this quiet time after the turbulent spring and early summer to strengthen its already dominant influence on the market for digital assets.

Last month it spiced up its existing free spot trading initiative to involve the Ethereum cryptocurrency, which, according to Binance, would give users the opportunity to act the historical merge on the Ethereum blockchain.

Market observers were not convinced at the time and told me that the step was synonymous with the attempt by a market leader to consolidate his dominant position.

This is of course a tactic that the traditional financial and technology world knows all too well.

"[IT] seems to me to raise some antitrust problems that are similar to those who talk about people in connection with Google and Amazon - namely the preference for at least somewhat open technology platform for their own products and services to competing", Peter Fox, partner at Scoolidge Peters Russotti & Fox LLP told me.

What do you think of the youngest stable coin decision from Binance? Mail me your thoughts to scott.chipolina@ft.com .

Weekly highlights

• A court document submitted this week shows that Voyager will digitally, cryptoplate and top -class victim of the crash from 22, on September 13, an auction for his assets. The auction will take place in the New York offices of Moles & Co, the investment bank of the battered company.

• Canadian supervisory authorities, Celsius, the loan platform led by Alex Mashinsky, which today is largely synonymous with the greatest collapse of the cryptom market in history. In a court file dated September 7, the Vermont Department of Financial Regulation announced that Celsius, apart from the company's net position in CEL, the native crypto token of the platform, had been insolvent since at least February 2019.

• from El Salvador to. . . * checks notes*. . . Woolpit, a village in Suffolk, northeast of London. The striving for Bitcoin to become the world's preferred currency has now reached Yum Yum Tree Fudge, a small Fudge manufacturer. Employee Adrian Turner said that the company started to accept Bitcoin as a means of payment for one year in order to be "ahead of time".

• Unless you have lived under a rock and cannot receive this newsletter, you will know that the Ethereum Fusion is getting closer quickly. As soon as this happens, Ethereum's energy consumption should almost disappear. The developers of Ethereum have deregistered One last big upgrade and the co-founder of the blockchain, Vitalik Buterin, also said this week that the merger could now take place already next Tuesday .

• The popular South American crypto exchange Mercado Bitcoin reduced more than 10 percent of its workforce at the beginning of this year. This week, the parent company of the stock exchange, the 2TM Group, has announced one step to dismiss 15 percent of its workforce, citing "challenges from the global economy". If you have followed the large crypto restriction of 2022, this will seem very familiar to you.

• Don't forget to look at the latest episode of the FT of our podcast series "A Skeptic’s Guide to Crypto". This week: The Bitcoin Church: Is crypto a cult?

Soundbite of the week: Gary Gensler again targets crypto

Gary Gensler, chairman of the US IPO Supervision Authority Securities and Exchange Commission, gave his most clear status on the legal status of crypto-assets in the USA and said that the vast majority of the 10,000 tokens on the market are securities

"Nothing on the cryptoma markets is incompatible with the securities laws. Investor protection is just as relevant, regardless of the underlying technologies."

data-mining

The decision of Binance to automatically convert the USDC stocks of the user into the company's native stablecoin bus comes at a good time.

Data compiled by CryptoCOMPARE shows that the Bitcoin and Ether trade volume of USDC on Binance in the second half of this year after a quiet year of the year.

This is all people for this week. I'm not there next week, but I leave it to the very competent hands of my colleague Philip Stafford and will be back in your inbox on Friday, September 23. I wish you a great weekend!