Stablecoins are rightfully earning a very good reputation, as they inspire more confidence and trust among users than assets such as Bitcoin and some of the top altcoins. That is why each day; more and more platforms are trying to develop their own stablecoin.
Such is the case of Binance, one of the most widely known cryptocurrency exchanges in the planet. According to reports, the platform will issue its own stablecoins sometime in the next two months. Bloomberg was the news site that broke the piece of news in the middle of the week.
Available for Several Currencies, Starting with the GBP
Wei Zhou, currently acting as Binance’s Chief Financial Officer, told the mentioned publication that the company will be issuing stablecoins “in a matter of weeks to a month or two.” The plan is to make them available for several currencies.
The first stablecoin will be pegged to the value of the British pound (GBP) and will be named “Binance GBP.” The business model, according to the executive, will be somewhat similar to that of Tether (USDT,) which involves making money off of interest on fiat deposits.
The Binance GBP, of course, will not be the only stablecoin that Binance will develop, as the platform intends to come up with other options backed by other national currencies like the yen and the euro. However, there is not any plan to issue a dollar-backed asset.
Why Not the USD?
On that end, Zhou explained that “from the users’ perspective, only certain portions of the world use the dollar. Other users use other currencies, and we feel it should be reflected in stablecoins as well.”
The array of stablecoins that Binance will issue will, allegedly, decrease Tether’s market share on the platform, which stands over 50% of stablecoin volume at the moment of writing this piece, per Zhou.
Twitter users first found out about Binance’s tests for a British pound stablecoin at the start of the week, noticing the listing “$BGBP” on the exchange. Changpeng Zhao, the platform’s CEO, replied to a user’s tweet, confirming that a stablecoin was indeed being tested, with £200 minted.
Chinese Exchanges and Stablecoins
More than $10 billion in USDT trading has taken place in Chinese exchanges in the first five months of 2019, while $450 million in USDT traded have come in the United States. Chinese crypto exchanges serve as the platform for more than half of all USDT trading in the planet.
As of now, Tether accounts for more than 98% of stablecoin trading volume, and whilst dozens of projects have tried to take away some of that market share, most have been unsuccessful. However, Binance project may represent the first serious threat to the USDT.
Kyle Samani, the Co-Founder of crypto hedge fund Multicoin Capital Management, expressed that “a stablecoin issued by Binance would certainly threaten Tether’s value proposition.”
Samani also stated that “Binance could also work with an auditor to offer strong assurances that the tokens are fully backed and easily redeemable. Considering the recent events with Tether (concerns about it being 100% backed by cash and securities,) those assurances would be a compelling reason to use Binance’s stablecoin.”
By Andres Chavez