Binance Burns Large Amounts of USDT and USDC on BNB Chain

On the afternoon of May 17, Binance announced the burn of a substantial amount of USDT and USDC tokens on the BNB Chain.

On its official Twitter account, the world's largest cryptocurrency exchange made the following statement:

"Today #Binance will burn a significant amount of Binance-pegged USDT and USDC tokens on BNB Chain. The equivalent amount of these tokens on their native networks, which were used as collateral, will then be released."

— Binance (@binance) May 17, 2023

This move by Binance has garnered significant attention, partly due to past admissions of errors in managing deposits and issuing collateral-backed tokens.

Read More: Binance Admits to Mixing Customer Deposits with Collateral Assets

Binance faced criticism in February 2023 when it was accused of not fully backing USDC. However, CEO Changpeng Zhao quickly addressed and clarified these rumors.

In the context of stablecoins, the U.S. government had also instructed Paxos to halt the issuance of BUSD (the primary stablecoin in Binance's ecosystem at the time) due to legal issues.

As of now, Binance has not provided a detailed explanation regarding the reduction of USDT and USDC supply on the BNB Chain ecosystem. However, this move is expected to decrease the stablecoin supply on the BNB Chain.

Initial speculation suggests that Binance may be aiming to balance the collateral mechanisms between chains or prepare the groundwork for a new stablecoin within its ecosystem.

Update:

Following the announcement, Binance also revealed plans to burn a number of Binance-pegged BUSD tokens on the BNB Chain.

"We will also be burning a number of Binance-pegged BUSD tokens on BNB Chain, with the equivalent amount of collateral being released."

— Binance (@binance) May 17, 2023