Binance Abandons BUSD for USDC, Takes $100M Stake in Circle

Binance, one of the world's largest crypto exchanges, has taken a $100 million stake in Circle as part of an expanded five-year commercial agreement centered on USDC. This move marks a significant shift for Binance, which once attempted to make BUSD its primary stablecoin.

In 2022, Binance announced that existing user balances of USDC and other stablecoins would be automatically converted into BUSD. However, this strategy unraveled in February 2023 when the New York Department of Financial Services ordered Paxos to stop minting new BUSD. As a result, Paxos ended its relationship with Binance over the token.

Now, Binance is betting on USDC as its primary stablecoin. Through the agreement with Circle, Binance will promote USDC across its global platform, particularly in emerging markets, while Circle will provide the infrastructure supporting its use. The exchange will also receive incentives tied to USDC balances held through its wallet infrastructure.

Binance co-CEO Richard Teng stated that Circle has earned its place as one of the most credible issuers in the world. By partnering with Circle, Binance can leverage its distribution capabilities without having to manage the increasingly complicated business of issuing a stablecoin itself.