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Binance Suspends Automatic Conversion from USDC to BUSD Amid Market Pressure

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On March 11, Binance said in a message on social media that due to the current market situation, the massive inflow of USDC assets increased the burden of auto…

Binance Suspends Automatic Conversion from USDC to BUSD Amid Market Pressure

On March 11, Binance said in a message on social media that due to the current market situation, the massive inflow of USDC assets increased the burden of automatic conversion, so Binance suspended the automatic conversion from USDC to BUSD, which is a routine risk management procedure step taken by Binance when monitoring the situation.

Binance: suspending automatic conversion of USDC is its routine risk management measure

Analysis based on this information:


Binance, the world’s leading cryptocurrency exchange, announced on March 11 through social media that it had to suspend the automatic conversion of the USDC stablecoin to BUSD. The reason behind the decision was the recent market turmoil following the COVID-19 pandemic, which resulted in a massive inflow of USDC assets. Due to this unexpected increase, the burden of automatic conversion became too much for Binance’s risk management protocols to handle.

Binance’s move to suspend the automatic conversion is part of its routine risk management procedures when monitoring the cryptocurrency market’s situation. BUSD is a stablecoin issued by Binance and is pegged to the US dollar, while USDC is a stablecoin supported by Centre, a consortium of partners led by Circle and Coinbase. Binance launched the automatic conversion feature in September 2019 to allow traders to convert USDC to BUSD at a 1:1 exchange rate automatically.

However, with the recent spike in USDC, converting these assets to BUSD automatically posed a significant risk to Binance’s operations. By suspending the procedure, Binance seeks to avoid additional risk and ensure stability in its platform. The decision also aims to safeguard user assets and minimize the likelihood of liquidation and other issues that may arise during times of market pressure.

The move aligns with Binance’s risk management approach, which prioritizes protecting its users’ assets from volatile market conditions. The exchange has long emphasized risk management, as seen in its introduction of a dynamic collateral ratio system in October 2020. The system allows traders to choose the most profitable way to manage their collateral in a rapidly changing market environment.

In conclusion, Binance’s decision to suspend automatic conversion from USDC to BUSD reflects its commitment to manage potential risks associated with sudden market changes. Binance has always prioritized protecting its users’ assets, and this move reaffirms its dedication to making the cryptocurrency market safer and more stable.

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