Binance market share could drop after abolishing most zero-fee trading, boosts TrueUSD stablecoin

In a Wednesday announcement, Binance phased out almost all zero-fee buying and selling Bitcoin (BTC) along with multiple trading pairs from its platform after nine months. An exemption was allowed for the TrueUSD/Bitcoin (TUSD/BTC) pair. This built atop a March 10 move to quietly wind down BUSD auto-conversion and re-list the stablecoins de-listed in September.

While the decision highlights TUSD's status as the platform's preferred stablecoin, it could see the largest cryptocurrency exchange, by trading volume, lose some of its market share.

A threat to Binance exchange's supremacy

The move may indicate a major shift for centralized cryptocurrency exchanges (CEXs), ending Binance's position as the leading crypto platform. Notably, zero-fee trading pairs represent around 60% of the platform's total trading volume.

Binance introduced zero-fee trading for some Bitcoin pairs worldwide during the summer of 2022, earning a significant market share against industry rivals. Noteworthy, this was when exchanges struggled with low trading volumes and plummeting revenues.

The strategic move last summer was, therefore, instrumental in helping the giant exchange expand its market share by around 22% relative to many other liquid exchanges.

It is worth mentioning that despite Binance's reasons for curbing zero-fee trading for select pairs, the move could prove unsustainable for the exchange in the long run. This point stands despite its ability to earn the platform a huge market share in the short run. Accordingly, without zero fees for most Bitcoin pairs, experts predict an eventual drop in Binance's market share.

The advent of TrueUSD stablecoin

TrueUSD was spotlighted around February when regulators clamped down on Binance USD (BUSD) and its issuing firm Paxos. In the debacle, the New York Department of Financial Services (NYDFS) ordered Paxos to terminate its support for the stablecoin under the Binance exchange umbrella. As a result, the supply of BUSD plunged 50% from $16 billion to $8 billion.

With the latest move, therefore, Binance seems to have identified TUSD as a successor to BUSD, with the former's market capitalization soaring more than 50% since the announcement. At the time of writing, TrueUSD, managed by Archblock, is showing a market cap of $2.039 billion. Allegedly, Tron founder and cryptocurrency billionaire Justin Sun could be the figure behind TUSD.

Nevertheless, it remains premature to establish the extent Binance looks to pump TUSD as its platform's "de facto standard." Even so, making trading free is a formidable tool. Trading firm Folkvang founder Mike van Rossum has since commented on the matter, saying:

If people end up trusting TUSD – very uncertain right now – this zero-fee promo can easily grow into the biggest market by volume.

A Binance spokesperson has also commented that Binance's goal "right now is to identify a diverse set of stablecoin products to offer users, particularly products that are transparent, regulated, and have strong relationships with banking institutions in markets that support innovation."

The spokesperson also asserted that "TUSD is the first of what will hopefully be many new stablecoin products being offered to users."

These changes come after the stablecoin market endured turmoil in early March when multiple US banks closely affiliated with cryptocurrency firms closed down.