Binance and Circle entered into a strategic partnership to increase the adoption and use of the USDC stablecoin during a press conference in Abu Dhabi on Wednesday.
According to Fortune, the partnership between Binance, the world’s largest cryptocurrency exchange, and Circle, which co-founded USDC with Coinbase, plans to capture a bigger share of this booming market, especially as new competitors emerge.
Circle to leverage Binance’s reach
Regulatory pressures have significantly shaped the landscape, especially for Binance, which it has had to contend with strict supervision leading to the discontinuation of the BUSD coin at the end of 2023.
Binance is recent settlement with the US Department of Justice (DOJ) has paved the way for this collaboration, allowing the exchange to re-enter the stablecoin market under a more compliant framework.
Highlighting the mutual benefits of this alliance, Circle Chief Business Officer Kash Razaghi said:
Binance has undergone a profound transformation of its business and over time we collectively agreed that it made sense to link one of the world’s most trusted and regulated stablecoins.
This partnership will not only allow Circle to benefit from Binance’s extensive user base and global reach, but also allow Binance to benefit from Circle’s established value relationships with American regulators.
While the details of the revenue sharing between the three entities – Binance, Circle and Coinbase – are not made public, it is clear that this alliance will improve the visibility and usage of USDC on the Binance platform.
As Binance integrates USDC into its corporate treasury operations, the stablecoin’s overall supply is expected to increase, further solidifying its position in the market.
Is Tether’s market leadership in danger?
Despite its success, Tether (USDT), the leading force in this market sector, has continued to gain momentum criticism from regulatory authorities around the world for its transparency and regulatory compliance.
While the company has done that consistently reported quarterly profits exceeding $1 billion, concerns remain about reserve management and accounting practices.
This distrust could provide an opportunity for Circle and Binance to gain market share, especially among risk-averse financial institutions looking for stablecoin solutions.
According to Fortune, this new coalition is ready to challenge Tether’s dominance, especially if… regulatory conditions change and new legal frameworks are emerging to encourage the use of bitcoin.
The potential for a more favorable regulatory environment under the incoming Trump administration could allow stablecoins like USDC to be integrated into mainstream financial practices.
Next to TetherBinance and Circle will face emerging competitors such as the Global Dollar Network, launched by Paxos and several other companies. This initiative aims to create a stablecoin that delivers returns to its members, offering an alternative model that could disrupt the established players in the market.
As the landscape continues to change, the coming year will be crucial in determining whether USDC or another stablecoin can effectively challenge Tether’s dominance. However, the growing interest in stablecoins suggests that the market could expand enough to accommodate multiple successful players.
At the time of writing, BNB is trading at $707, closer to its all-time high of $788 on December 4, and up 6% over the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com