Sep 20, 2022 - Economy & Business

India's largest crypto exchange follows Binance on stablecoins

Illustration of the Binance logo on a compass.
Illustration: Aïda Amer/Axios

India's largest crypto exchange is following Binance out of some dollar-pegged stablecoins, further tilting the tables toward the BUSD token.

Driving the news: The exchange, WazirX, on Monday said it already stopped taking new deposits denominated in USDC, USDP, and TUSD — the dollar-pegged stablecoins from Circle, Paxos, and True. And any existing deposits would soon be auto-converted to Binance's namesake stablecoin.

Context: The move follows on the heels of Binance's own decision to institute a BUSD auto-convert feature and echoes its justification for delisting competing stablecoins: to "enhance liquidity and capital efficiency" for the good of its customers.

The intrigue: Some people think WazirX is actually a Binance-owned company, per an acquisition announcement made roughly two years ago.

  • In August, however, Binance CEO Changpeng Zhao, or CZ, denied that the transaction closed. The Indian exchange at the time was mired in a regulatory investigation that resulted in law enforcement freezing assets on the platform. (The exchange has since been reinstated.)
  • "Binance does not control or operate WazirX," according to Binance spokesperson Lily Lee. WazirX did not respond to requests for comment.

Details: USDC, USDP, and TUSD spot market pairs will be delisted on WazirX on Sept. 26, according to the company's blog post.

  • Withdrawals in that denomination before BUSD-auto conversion will be supported until September 23.
  • Customers can still withdraw their stablecoins off of WazirX in those three stablecoin denominations.
  • Of note: WazirX customers appear to have gotten even less notice than Binance customers, who got the news in early September.

The big picture: Binance is the world's largest crypto exchange, and while its BUSD is now the third-largest dollar-pegged stablecoin behind Tether's USDT and Circle's USDC, it appears poised to close in.

  • Yes, but: Size also indicates great regulatory responsibility. (Read: scrutiny)

Between the lines: The public spat about who owns WazirX erupted on the heels of India's Directorate of Enforcement's investigation of the exchange's parent company, Zanmai Labs, for allegedly allowing money laundering to occur on the platform.

  • India's regulators alleged that Zanmai Labs "created a web of agreements with — Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore — to obscure the ownership of the crypto exchange," following a search conducted on one of Zanmai's directors.

Catch up quick: CEO CZ last month denied the acquisition via tweet: "This transaction was never completed. Binance has never — at any point— owned any shares of Zanmai Labs, the entity operating WazirX."

  • That prompted WazirX founder Nischal Shetty to push back on CZ's claim.
  • CZ then conceded that Binance provides wallet services for WazirX, and control of WazirX's domain was transferred under its control. He further countered: "We could shutdown WazirX. But we can't, because... it hurts users."

Meanwhile, Binance updated the November 2019 WazirX-acquisition announcement, clarifying that the acquisition only pertained to "certain assets and intellectual property of WazirX."

  • Days following the spat and the updated acquisition announcement, Binance removed the ability for users to make off-chain transfers between its exchange and WazirX.
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