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Binance USDC-BUSD Conversion Begins ‘Second Great Stablecoin War’

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  • FTX’s Bankman-Fried said Binance’s auto conversion of USDC to BUSD sparks a stablecoin war.
  • In 2018, stablecoins battled for dominance, with USDC and USDT edging out TUSD, GUSD, and USDP.
  • BUSD’s supply is on a tear as it topped $20 billion this month for the first time.

The CEO of FTX, Sam Bankman-Fried, said Binance’s conversion of its customers’ USDC to BUSD is sparking “the Second Great Stablecoin War.” The CEO made the remarks while commenting on a tweet that claimed the supply of the Binance stablecoin (BUSD) was on a tear as it topped $20 billion this month for the first time. 

Bankman-Fried believes Binance’s auto-conversion rule triggered the significant change in BUSD supply, marking what he described as another stablecoin war. He recalled the 2018 incident when stablecoins battled for dominance, with USDC and USDT edging out TUSD, GUSD, and USDP.

Furthermore, Bankman-Fried noted that the difference between the first stablecoin war and now is the favorable interest rates as more revenue accrues from stablecoins. In conclusion, he said, “it will be interesting to see what emerges from the non-fiat-backed-stablecoin space, post-Luna, and post-DAI-holding-USDC,” guessing that it will be something interest-bearing or otherwise with some upside.

BUSD remains the third largest stablecoin coming after USDT and USDC, with a market cap of over $21 billion. By implication, Binance’s stablecoin supply has an all-time high share of 15.48% of the overall stablecoin market.

Early last month, Coin Edition reported that traders on Binance, the largest crypto exchange, would have their stablecoin holdings of USDC, USDP, and TUSD auto-converted to the Binance native stablecoin BUSD. The rule took effect on September 29, 2022.

Notably, the crypto exchange said the development was “to enhance liquidity and capital-efficiency for users.” Nonetheless, users’ existing balances and new deposits of USDC, USDP, and TUSD auto-converts to BUSD at a  1:1 ratio


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