BofA Says Crypto Exchange Binance to Benefit From Increased Supply of Its own Stablecoin
Categories: Crypto News
BofA Says CryptoExchange Binance to Benefit From Increased Supply of Its own Stablecoin
Binance's decision to convert all currentbalances and future deposits of the three stablecoins USD Coin (USDC),TrueUSD (TUSD) and Pax Dollar (USDP) to its native Binance USD (BUSD) couldgenerate limited additional revenue in the short term. But Bank of America(BAC) said in a research report on Thursday that it could have biggerimplications in the long term.
The reportstated that the automatic conversion could increase the supply of BUSD to $908million, with 2% of the supply of USDC ($898 million) and 1% of the supply ofUSDP ($10 million) held on Binance. Stablecoins are a type of cryptocurrencywhose value is tied to another asset, such as a U.S. currency dollarsor gold.
The banknotes that 86% of BUSD, or $17 billion, is held on Binance,indicating that the stablecoin is not being used regularly in the widercrypto ecosystem and, therefore, lacks utility.The bank notes that 86% of BUSD,or $17 billion, is held on Binance, indicating that the stablecoinis not being used regularly in the broader crypto ecosystem. and therefore,lacks utility.
Bank ofAmerica sees thepotential for a large increase in BUSD supply over the long term as exchangeusers become more familiar with the coin and add more support for it in aneffort to attract users. Binance will benefit from this increased supplyas it is able to invest additional reserves that will be available in the U.S.As would support stablecoins in cash equivalents.
Treasury andovernight loans secured by the Treasury to earn interest income. Theimplications for USDC are limited, but the stablecoin has the potentialto increase its market share relative to Tether (USDT), the largest stablecoinby market cap, which was excluded from automatic conversion, Because exchangeusers are more likely to convert BUSD to USDC than USDT when withdrawing funds.Stablecoin volume is likely to increase significantly as “the Web3ecosystem of decentralized applications develops,”.