Binance puts $100 million on Circle and gives USDC a serious boost. The exchange acquired 1.237 million shares of the stablecoin issuer at $80.84 apiece, while signing a new five-year trading agreement. The goal is to further push USDC on Binance, particularly in emerging markets where Tether maintains a considerable lead with USDT.
In brief
- Binance invests $100 million directly into Circle.
- The USDC trade agreement is renewed for five years.
- Tether maintains a clear lead with approximately $183 billion worth of USDT in circulation, compared to nearly $75 billion for USDC.
Binance becomes directly interested in the growth of USDC
The operation goes well beyond a financial investment. Binance now owns a stake in Circle and has agreed to further promote USDC to its users. Circle, for its part, will pay the exchange a monthly commission calculated based on the USDC held via its wallet infrastructure.
In other words, the more the use of USDC progresses in the Binance ecosystem, the more both companies can benefit from it.
The relationship had already started to produce results. Circle still relies heavily on its stablecoin, which accounted for the bulk of its revenue in the second quarter. The company then generated $701 million in revenue, driven by the expansion of USDC.
This time, Binance is going even further. The 1,237,011 shares were acquired in a private placement closed on September 17. The exchange will generally not be able to sell, transfer, or hedge them for up to two years. However, he retains his voting rights. Richard Teng speaks of a long-term conviction. The trade agreement runs until 2031.
USDC gains ground without yet catching up with USDT
The balance of power remains largely favorable to Tether. USDT has around $183 billion in circulation, compared to around $75 billion for USDC. Above all, Tether’s stablecoin remains extremely present in international markets, where users use the digital dollar for trading, payments or simply to maintain a value denominated in dollars.
Circle, however, has another advantage: transactional activity. An analysis from Mizuho published earlier this year already showed that USDC was outperforming USDT in adjusted trading volume. At the time, around $2.2 trillion had flowed through USDC since the start of the year, compared to USDT’s $1.3 trillion.
Binance can now bring what Circle still lacks in several regions: massive distribution. In particular, the exchange wants to further integrate USDC into its savings and investment products and use incentives such as reduced fees on certain pairs denominated in USDC. The deal explicitly targets emerging markets, precisely one of the terrains where Tether has built its power.
Tether maintains a lead that is difficult to erase
One hundred million dollars will obviously not be enough to topple Tether. USDT maintains more than double the capitalization of USDC. Its historical presence on exchanges, in international transfers and on networks like Tron gives it liquidity that is difficult to reproduce quickly.
Tether recently claimed more than 30 million new wallets per quarter. The group also claims that a significant portion of USDT usage now lies outside of simple crypto trading. Circle is therefore not setting out to conquer an empty market. The interest of the agreement with Binance lies above all in its duration.
Five years of promotion, a direct stake of $100 million and commissions linked to USDC balances create a much stronger relationship than a simple listing. A few years ago, Binance was pushing its own BUSD. Today, he owns a share of Circle and is directly involved in the distribution of its main stablecoin. Tether remains ahead. Above all, Circle has just recovered an important ally.
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