The largest crypto exchange to date, Binance, is on the final stretch of issuing their own stablecoins. According to the company, “last preparations are on the way, and the launch is scheduled to take place within a couple of weeks to a month.”
Stablecoins are often used as a tool for migrating cash in times of market fluctuations and instability, and can be the first serious threat for the Tether cryptocurrency.
Over 60 stablecoin projects tried to shed Tether’s dominance, but the Bitfinex-owned U.S. Dollar-backed cryptocurrency remained dominant with 98.7% market share. The statistics was reported by Bitfinex’s CTO Paolo Ardonio. Binance has the real chance to leverage on its exchange dominance and release their stablecoins into a fierce competition with Tether.
Kyle Samani, the co-founder of the U.S-based crypto hedge fund Multicoin Capital Management, stated that Tether would be threatened when Binance issues their stablecoins, because of their leadership in the field of crypto exchanges. Binance will issue its first fiat-backed token with 100% denomination in British pounds — Binance GBP. “The mechanism about Binance’s profit will be the same as Tether’s — they will rely on interest on fiat deposits,” Binance’s CFO Wei Zhou stated.
Zhou added that Binace does not have plans to issue USD-backed stablecoin, but will incorporate stablecoins for other fiat currencies. Binance will also join forces with partners, who will utilize Binance’s Chain — the internal blockchain of Binance. An example of that is the newly-formed startup “Stably” which is already using Binance Chain to issue a USD-backed stablecoin.
“Our key mission is to make stablecoins more accessible than the major fiat currencies, such as the Yen and the Euro. We cannot eliminate the European Union or China in terms of political and economic aspects, as their official currency is not the U.S. Dollar”, Zhou added.
The introduction of Binance’s stablecoins may lead to a significant drop of Tether’s volume on Binance. As of press time, Binance accounts for 50% of Tether’s volume.
The stablecoins` release comes in tough times for the companies behind Tether as they fight legislation. Media news highlighting that Tether is only 74%-backed by dollars deteriorates Tether`s position even further.
The use of Binance Chain will have a positive impact on Binance’s own token — BNB, as all transactions within the network will be made through the token, creating a premise for a growth of BNBs in circulation.
Jeff Dorman, CIO at Arca stated that “more volumes mean more revenue and Tether is bound to lose some of its market share, but Tether has proven over the past two years that it’s not an easy competitor to beat.”