- Binance, OKX, and ByBit are the top three exchanges for stablecoin balances.
- The three platforms favor the most popular stablecoin, Tether, and have USDT as their largest stablecoin holdings.
- Circle's DAI is in second place, while USDC and BUSD compete for third place.
An analysis of exchange stablecoin holdings shows that Binance, a major player in the crypto ecosystem, is slowly changing its loyalty to stablecoins. Tether USD (USDT) is still the undisputed leader among stablecoins, but things are likely to change in the coming days.
Stablecoin data shows that exchanges prefer Tether (USDT)
Increasing regulatory oversight has led to extreme volatility in the cryptocurrency market. In particular, the stablecoin ecosystem witnessed the most drastic paradigm shift after the U.S. Securities and Exchange Commission (SEC) issued Binance Dollar (BUSD) and Circle Dollar Coin (USDC) against the two major U.S. stablecoin issuers, Paxos.
Since the SEC intervention, the market capitalization of stablecoins has dropped dramatically. Exchanges associated with the aforementioned stablecoins have had to make some changes to the way they operate.
According to data provider Nansen, the top three exchanges based on stablecoin balances include Binance, OKX, and ByBit, holding $11.3 billion, $3.64 billion, and $980 million, respectively.
Obviously, Binance is the winner in terms of stablecoin holdings, which is a natural addition given the platform's popularity. All exchanges seem to have USDT as their top stablecoin, and again, it's obvious considering that it's the most popular despite the allegations and lawsuits.
As the chart below shows, Binance, which currently holds $2.45 billion in USDT tokens, is not the largest holder of Tether, but the Seychelles-based OKX exchange with $3.42 billion in its vault.
Looking at the second largest holdings, investors can notice that Dai (DAI) is a crowd favorite. Binance is once again the largest holder of DAI, followed by OKX and ByBit.
Due to the recent conflict with the SEC, the third largest holding is Circle's USDC.
History and recent changes in Binance vs Tether
Binance CEO Changepeng "CZ" Zhao has been accused of a number of things, including the collapse of the US-based FTX exchange, which is a huge supporter of Tether. Although Binance does not publicly support USDT or its parent company, it already holds a large number of the stablecoin due to its popularity.
In September 2022, Binance held nearly $5 billion worth of USDT. But since then, it has reduced its exposure to stablecoins and instead focused its efforts on promoting BUSD through zero-fee transactions.
According to Kaiko research analyst Riyad Carey, its market share quickly increased from 50% to 72% as Binance expanded the program to other trading pairs on July 8, 2022. However, one of the world's largest exchanges announced on March 22, 2023 that it would stop the zero-fee trading promotion after the promotion failed to help its market share drop from a peak of 70% to 58%.
There are two reasons for the decline in Binance's USDT share
- The first one is obvious – due to SEC intervention, Binance has been reducing its exposure to relatively riskier stablecoins, including USDC, BUSD, and USDT. Tether has been a target for regulators for some time, but the situation seems to have stabilized for now. Binance held about $18.58 billion in BUSD in September 2022, but due to SEC intervention, the exchange's BUSD balance has decreased by more than 50% to $7.13 billion.
- The second reason is speculation that Binance is increasing its exposure to True USD (TUSD), which is linked to TRON founder Justin Sun.
Here is a comparison of the stablecoins it held during September 2022 and March 2023.
Percentage change in Binance stablecoin holdings
Starting in mid-March 2023, Binance began promoting the use of TUSD on its platform with new features such as listings, swaps, and loans.
Binance's latest announcement points to the addition of multiple altcoin pairs and encourages market makers through its "zero maker fee" policy.
Answer the question: Will Tether be less relevant?
After being at the helm for so long, Tether is unlikely to exit the stablecoin race. Why? As Binance reduces its USDT holdings, OKX is stepping in to withdraw its tokens. In fact, OKX is currently the largest USDT centralized exchange.
Regulatory concerns aside, Binance has no reason to completely reject cryptocurrency trading, the most popular base pairs. The exchange can reduce exposure to USDT while building up a TUSD vault, but as mentioned earlier, it won't give up on Tether.
The only situation where this will happen is if the regulator determines Tether in a lawsuit. This could prompt Binance and other exchanges to do the same.