Some comments made by Coinbase CEO Brian Armstrong during the presentation of the company’s second-quarter results raised eyebrows in some.

Discussing the Market Cap of USD Coin (USDC), Armstrong stated Binance reportedly transferred some of its funds from USDC to another stablecoin. However, USDC’s capitalization was not particularly affected:

“Binance has effectively moved some of its funds from USDC to another stablecoin. However, based on our data from the last six to seven weeks, the USDC market cap has increased. So this is a significant number.”

Coinbase is a member of the consortium that owns USDC. Binance also once held substantial USDC reserves; however, according to Armstrong’s statements, it seems that the exchange has turned some of its reserves into other stablecoins.

According to on-chain data, Binance recently reportedly exchanged USDC for US dollars. Many market observers gradually moving its funds to a new stablecoin called First Digital USD (FDUSD):

“CZ + Sun exited $USDT via $USDC to buy USD. Tether can’t save billions.

New stablecoins are emerging. In just a few months, volumes in $TUSD have gone from 0% to 20%. Binance controls 90% of the $TUSD supply. Very simple.

The sign is moving, be careful.”

CZ + Sun is coming out $USDT Street $USDC to receive USD. Tether can’t save billions.

New stablecoins are emerging. $TUSD nominal volumes went from 0% to 20% in just a few months. #Binance controls 90% of $TUSD supply. It’s very simple.

The cartel turns. Please advise. https://t.co/T8PLDNfu2n

— Not Tiger Global (@NotChaseColeman) August 4, 2023

However, this isn’t the first time Binance has converted USDC to other stablecoins. In September 2022, the company announced that it will automatically convert all USDC held by users on the platform to Binance USD (BUSD), Binance-branded stablecoin issued by Paxos Trust Company.

Binance has been looking for new stablecoins for a long time, following the New York Department of Financial Services. Ordered from Paxos To stop issuing BUSD. Binance later reverted to TrueUSD (TUSD) to reduce the need for stablecoins; however, TUSD lost its anchor and was stopped. on June 10.

Binance then turned to another relatively unknown stablecoin: FDUSD issued by a Hong Kong-based company. FDUSD has gained ground after Binance has rallied in recent weeks. launched several trading pairs with this stablecoin.

The rise of FDUSD did not go unnoticed by Paolo Ardoino, Tether’s Chief Technology Officer:

“Isn’t it interesting that USDT is under pressure (just under 10 basis points just to get market makers to react) … and yet its main competitor, USDC, which is expected to benefit, is still heavily sold? . All this time, just two days ago, a new rival was born…”

Isn’t it interesting that USDt is under pressure (just a little within 10bp to force market makers to react) and the main competitor USDc, which you would expect to gain from this situation, is still heavily redeemed? The contestant was born 2 days old…

— Paolo Ardoino (@paoardoino) August 3, 2023

USDC is the second largest stablecoin by market cap. But, USDC’s market cap nearly halved last yearFrom $44.5 billion to $26 billion.