Stablecoin Duo Forms Steady Alliance Between Circle and Binance
Circle and Binance have joined hands in a partnership, intensifying connections between USD Coin (USDC), a stablecoin with a management of $41 billion in assets, and the world's biggest cryptocurrency exchange.
This partnership, announced today at Abu Dhabi Finance Week, isn't about introducing USDC to the Binance platform—which it's already available on—but expanding its role within Binance's array of trading products and services. This includes additional USDC trading pairs and special promotions on USDC across trading, according to CEO Richard Teng. Binance will also utilize the stablecoin for its corporate treasury and collaborate with Circle "to establish crucial relationships across the global finance and commerce landscape," according to the announcement.
Linking up with a significant U.S.-based crypto company could bolster Binance's reputation, implying a stronger dedication to regulatory compliance. Binance is still rebuilding its image, especially in the U.S., after its founder Changpeng Zhao (CZ) resigned as CEO in November 2023 as part of a settlement with the U.S. Department of Justice. He pleaded guilty to violations of anti-money laundering and sanctions laws and served several months in federal prison. Binance also paid a $4.3 billion fine to the government and completely exited the U.S. market. While Zhao is prohibited from managing the crypto exchange he founded, he remains its largest shareholder and controls billions of dollars' worth of its exchange token, BNB. With a net worth of $66 billion, he is still the wealthiest person in crypto.
For Circle, partnering with the world’s largest crypto exchange to promote USDC adoption represents a strategic move to challenge the market dominance of its rival, Tether—the issuer of USDT, the world’s largest stablecoin with a $138 billion market capitalization. The two assets almost reached parity during the 2022 bear market, but Circle faced a significant setback when it was revealed to hold reserves at Silicon Valley Bank. Following this, Tether solidified its position as the leading stablecoin provider.
Leveraging Binance’s extensive network of 240 million reported users could help USDC bridge the gap. A surge in growth would be especially beneficial as Circle prepares to go public next year. In January, the company filed a confidential S-1 with the Securities and Exchange Commission.
Circle also has close ties with Coinbase, the largest U.S.-based crypto exchange. Coinbase holds an equity stake in Circle, and the two share revenue from certain USDC reserves.
As the industry expands and gains broader acceptance among mainstream investors, the two giants could find themselves encroaching on each other's territories. Coinbase recently entered the off-shore crypto derivatives business—a $1.2 trillion monthly volume market where Binance already holds a substantial share. Meanwhile, Teng stated in a December 9 interview to Bloomberg that discussing a re-entry into the U.S. market after the company’s recent exit is “premature.” However, the possibility of a return cannot be ruled out.
Kash Razzaghi, chief business officer at Circle, declined to disclose the specifics of the arrangement but, in written comments to Our Website, said “Circle’s partnerships with Binance and Coinbase are distinct. Binance has undergone a profound transformation of its business, and over time, we mutually agreed that it made sense to pair one of the world's most trusted and regulated stablecoins, USDC, with the world’s largest cryptocurrency exchange to prioritize the safety and security of their customers’ assets as Binance focuses on improving its regulatory scorecard.”
This partnership between Circle and Binance could potentially lead to the integration of USDC into more Binance trading products and services, providing enhanced trading opportunities for users. Binance, looking to bolster its reputation, may also use USDC for its corporate treasury, demonstrating a commitment to regulatory compliance. Furthermore, this alliance could potentially help Circle challenge the market dominance of Tether's USDT by leveraging Binance's extensive user base.
