In a bid to drive global adoption of its USDC stablecoin, Circle paid $60.25 million to Binance to promote and hold the digital asset. This strategic move aims to solidify USDC’s position in the market, particularly in Europe, where Binance has most recently delisted USDT (Tether) due to non-compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulations.
As reported by ChainCatcher, according to the IPO S-1 filing submitted by Circle to the U.S. Securities and Exchange Commission (US SEC), Binance is the first exchange to be approved as a participant in the stablecoin ecosystem protocol. Circle paid Binance the $60.25 million to Binance as a one-time upfront fee. Circle also agreed to pay monthly incentive fees to Binance based on the USDC balance held by the cryptocurrency exchange. Under the arrangement, Binance is required to promote USDC on its platform and also hold a certain amount of USDC in its financial reserves. Binance gets to receive the incentive fees when it holds at least 1.5 billion USDC. With certain specific exceptions, Binance committed to holding 3 billion USDC. The deal is a two-year deal.
Background
This news will not come as a surprise or fresh news to many though. December last year, Circle announced a strategic partnership with Binance to make USDC become even more widely available across Binance’s global platform. This ensures that Binances 240 million global users seamlessly adopt USDC for trading, saving, and payments applications.
The partnership between Circle and Binance is a significant development in the stablecoin market. With Binance’s vast user base and Circle’s commitment to regulatory compliance, the collaboration is poised to increase USDC’s visibility and adoption.
Read also: Circle and Binance partner to boost global USDC and crypto adoption.
Key Aspects of the Deal
- Promotion and Holding: Circle will promote USDC on Binance’s platform, while also holding the stablecoin to facilitate transactions and increase liquidity.
- Regulatory Compliance: The partnership underscores Circle’s commitment to adhering to MiCA regulations, which require stablecoin issuers to maintain transparent reserves and undergo rigorous oversight.
- Market Impact: The deal is expected to boost USDC’s market share, particularly in Europe, where USDT’s delisting has created a void in the stablecoin market.
Read also: The US Government harnesses stablecoins to bolster Dollar’s global dominance
Implications for the Stablecoin Market
The partnership between Circle and Binance has significant implications for the stablecoin market:
- Increased Competition: The deal intensifies competition in the stablecoin market, with USDC emerging as a strong contender to USDT.
- Regulatory Compliance: The partnership highlights the importance of regulatory compliance in the stablecoin market, with Circle’s adherence to MiCA regulations setting a new standard for the industry.
- Market Shift: The delisting of USDT by Binance and other exchanges may lead to a market shift, with USDC and other compliant stablecoins gaining traction.
Read also: Binance delists USDT in Europe: Impact on Tether’s Stablecoin Dominance
Conclusion
Circle’s $60.25 million deal with Binance is a strategic move to boost USDC adoption and solidify its position in the stablecoin market. As the market continues to evolve, it will be interesting to see how USDC and other stablecoins perform in the face of increasing regulatory scrutiny and competition.
Read also: US Dollar Stablecoins hit $230 Billion, dominated by professional flow
Image source: CoinStats
Discover more from Crypto Asset Buyer
Subscribe to get the latest posts sent to your email.
