On Wednesday morning in Abu Dhabi, Binance and Circle announced a strategic partnership to promote USDC, a stablecoin jointly owned by Circle and Coinbase.
The collaboration comes as stablecoins gain traction in mainstream finance and competitors look to challenge the dominance of market leader Tether.
The Alliance
Details about the revenue sharing in this deal remain undisclosed, although sources told Fortune that Binance will not take an equity stake in Circle.
According to the press release, the partnership aims to expand global adoption of USDC. Binance will incorporate USDC into its full suite of products and services, offering its 240 million global users access to the stablecoin for trading, savings and payment applications.
As part of the agreement, Binance will adopt USDC as a core component of its corporate treasury. On the other hand, Circle will support Binance by providing the technology, liquidity and tools necessary to enable user access to USDC while working to strengthen relationships in global finance and trade.
Coinbase welcomed the development, with Shan Aggarwal, its vice president and head of business development, stating: “As the list of USDC ecosystem partners expands, the circulation of USDC will continue to grow, helping to increase freedom economy around the world and will lead the industry. on a basis of transparency and trust.”
Jeremy Allaire, President and CEO of Circle, highlighted Binance’s innovation and its potential to make USDC a household name on its platform. Binance CEO Richard Teng announced the exchanges’ plans to introduce more USDC trading pairs, special promotions, and new use cases for stablecoins globally.
Battle for dominance
The stablecoin market is currently dominated by Tether, which has a market capitalization of $138 billion, well ahead of USDC at $40 billion. Despite allegations of questionable accounting practices and links to illicit activities, the company remains a key player in the market.
Binance was previously a major competitor, with its native BUSD reaching a market capitalization of $23 billion. However, regulatory pressure in 2023 forced it to close operations. Circle, during this period, criticized Binance and Tether for not complying.
The latest partnership marks a change in their relationship. After resolving regulatory issues with the US Department of Justice, Binance has committed to a supervisory regime, making it possible for the exchange to align with Circle’s regulated and trusted USDC.
However, this collaboration involves revenue-sharing agreements between the three companies, which could complicate efforts to dislodge Tether’s dominance.
Meanwhile, other competitors are taking steps to challenge the leading stablecoin issuer. Robinhood, Galaxy Digital, Kraken, and Paxos recently formed a consortium supporting the latest stablecoin offering (USDG) issued by Paxos.
In a statement on November 5, the company shared that the new ‘Global Dollar Network’ was designed to accelerate the global adoption and use of these assets around the world.
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