Stablecoin wars: Binance follows Circle, stops USDC minting on Tron

• Binance will discontinue USDC on Tron due to Circle’s “safety and transparency.” 
• In less than a year, FDUSD has risen as legacy stablecoins face regulatory heat.

The Binance [BNB] exchange has announced plans to discontinue USDC minting on the Tron [TRX] network by early April. 

Announcing on X (formerly Twitter), Binance cited Circle’s (USDC issuer) previous announcement to stop operations on Tron. 

“Following Circle’s discontinuation of USDC support on the Tron network (TRC20), Binance will cease support for USDC deposits and withdrawals via TRC20 starting from 5 April 2024, 02:00 am UTC.”

However, the exchange maintained that “deposits and withdrawals of USDC via other supported networks will not be impacted.”

Is the regulatory heat shaping stablecoin’s wars?

In February, Circle announced a plan to discontinue USDC minting on Tron, citing “safety and transparency” reasons. 

“This action aligns with our efforts to ensure that USDC remains trusted, transparent, and safe – characteristics that make it the leading regulated digital dollar on the internet.”

The move was surprising, given that Tron is home to a massive stablecoin market. For example, Tether (USDT) is worth $104B in market capitalization, and about half of that is in Tron, as per DefiLlama

Although Tron founder was charged with SEC violations and fraud last year, Circle didn’t explicitly state regulatory pressure as the reason for the discontinuation of USDC on the network. 

However, in a letter to US senators in November 2023, Circle distanced itself from Justin Su and his affiliates.

Last year, Binance disabled support for its stablecoin (BUSD), citing regulatory heat. The exchange opted for a new stablecoin, First Digital USD (FDUSD), for replacement. 

A recent stablecoin report by CCD data showed that FDUSD has exploded since then.

“In January, the trading volume of FDUSD pairs on centralized exchanges rose 51.1% to $122bn, making it the second most popular trading pair after USDT.”

Additionally, the report expounded that,

“BTC-FDUSD pair on Binance was the most traded pair for BTC amidst the spot Bitcoin ETF approval, recording a monthly volume of $80.8bn.”

At the time of writing, FDUSD was the fourth largest stablecoin with a market cap of $2.24B. USDC was number two with $30B, followed by Dai [DAI] at $4.8B, as Tether [USDT]

FDUSD is less than a year old, but its sharp rise could be attributed to regulatory pressure faced by legacy stablecoins. However, whether it will avoid the same fate as its peers is unpredictable.