WazirX Follows Binance; Stops USDC, USDP and TUSD Deposits Two Weeks On

Indian cryptocurrency exchange WazirX has informed its customers that they have decided to stop deposits of USD Coin (USDC), Paxos Standard (USDP) and TrueUSD (TUSD) Blockchain Stablecoins on their platform.

This comes into effect two weeks after Binance, the world’s largest crypto exchange by volume, said on September 5, 2022 that they will pause the trading of these coins – USDC, USDP, and TUSD on the Binance platform. Binance said it would automatically convert all user balances in these coins to Binance USD (BUSD) on September 29 in a 1:1 ratio.

Taking into account the liquidity provided by Stablecoins and capital efficiency needs for users, WazirX has also decided to implement a BUSD auto-conversion in the ratio 1:1 for all users’ existing balances of USDC, TUSD, and USDP Stablecoins.

According to a WazirX support guide, the timelines for the respective changes have also been shared.

• Withdrawals: The withdrawal of the monetary balance held in USDC, USDP and TUSD Blockchain Stablecoins will be supported till 5pm Indian Standard Time (IST) on September 23. 
• Delisting: Delisting of USDC, USDP, and TUSD spot market trading pairs will occur at 7.30 am IST on September 26. After the respective Stablecoins are delisted, WazirX will automatically convert the balances to BUSD in a 1:1 ratio, adding that the tentative timeline for such conversion is on or before October 5.

WazirX further clarified that after the auto-conversion is completed, users will be able to withdraw USDC, USDP, or TUSD at a ratio of 1:1 from their BUSD balances, apart from also viewing their USDC, USDP or TUSD denominated balances in the BUSD denominated account.

What Is A Blockchain Stablecoin?

Blockchain is the name of a software which uses distributed ledger technology (DLT). For instance, let’s say you note down some information on a ledger (diary) which has to be refreshed daily by collecting data from multiple users. So what you essentially do is create copies of this ledger and distribute the same to multiple users. Hence, each user will have access to the same information in the ledger. 

Now, when a new data is to be input in the ledger, one cannot make an entry in anyone’s copy, thinking that others will do the same. There has to be a consensus among all the ledger holders that this particular new data entry is to be recorded in the ledger, hence the term ‘distributed ledger’. 

In the simplest of terms, this is exactly what Blockchain does.

That said, this way of getting user’s consensus differs from Blockchain to Blockchain. For instance, Ethereum Blockchain uses proof-of-stake now, while Bitcoin uses proof-of-work, and likewise, other Blockchains use different consensus mechanisms.

Stablecoins are Blockchain-based crypto tokens mostly backed by a fiat currency for transactions. Some Stablecoins are also backed by physical gold and others. Stablecoins need a Blockchain or similar distributed ledger technology (DLT) to record transactions but the choice of the same depends on the Stablecoin issuer.

"Stablecoins bridge the worlds of cryptocurrency and everyday fiat currency because their prices are pegged to a reserve asset like the $ or gold. This dramatically reduces volatility compared to something like Bitcoin and results in a form of digital money that is better suited to everything from day-to-day commerce to making transfers between exchanges," said Amanjot Malhotra, country head, Bitay India, the Indian subsidiary of Turkish crypto exchange Bitay.

What Did Binance Do In Regard To USDC, USDP and TUSD?

On September 5, Binance, the world’s largest crypto exchange by volume, said that Stablecoins USDC, TUSD, USDP will no longer be available for trading on the Binance platform, as it will automatically convert all user balances in these coins to BUSD on September 29 in a 1:1 ratio.

On September 26, i.e., three days before the auto conversion event occurs, Binance said that they will delete and stop trading on the following spot trading pairs: USDC/BUSD, USDC/USDT, USDP/BUSD, USDP/USDT, TUSD/BUSD, TUSD/USDT.

According to data from Blockchain analysis company, Nansen, since this announcement by Binance, the average daily transactions in BUSD has jumped by about 15 per cent, reported Coindesk.