Binance and Circle Form Alliance to Challenge Tether 

What Are the Goals of the Binance and Circle Alliance?

The strategic partnership between Binance and Circle is mutually beneficial. For Circle, it grants access to Binance’s vast global user base of over 240 million, significantly broadening USDC’s reach. For Binance, the partnership leverages Circle’s strong relationships with regulators in the U.S. and other countries, helping the exchange regain its footing in the stablecoin market after discontinuing support for BUSD.

Circle CEO Jeremy Allaire underscored the partnership’s significance on X (formerly Twitter): “Through our collaboration, Circle will provide Binance with a range of technology, liquidity and other tools for Binance users to benefit from the trust and innovation that Circle has built for USDC.”

Shan Aggarwal, Vice President and Head of Corporate Development and Ventures at Coinbase, highlighted the importance of expanding the USDC ecosystem, emphasizing its role in promoting economic freedom and building an industry founded on transparency and trust.

It’s worth noting that Binance did not acquire a stake in Circle as part of this agreement. However, the two companies will share revenue generated from USDC trading operations moving forward. The details of this revenue-sharing arrangement remain confidential and have not been publicly disclosed.

Binance's Strategic Shift

Binance once held a respectable, though not leading, position in the stablecoin market with its BUSD token, issued in partnership with Paxos. However, in 2023, regulatory pressure forced the suspension of BUSD issuance. Despite Paxos resolving its legal challenges by June 2024, BUSD failed to regain momentum, and its development was effectively shelved.

This marked a significant setback for Binance’s ambitions in the stablecoin space. Without prospects for expanding its native stablecoin, BUSD’s trading volumes plummeted nearly sevenfold within a year. 

For context, daily trading volumes, which stood at $55.6 million in January 2024, dropped to just $8 million by January 2025.

The inability to secure regulatory approval for BUSD’s use in European markets further constrained its utility, limiting its trading primarily to African and Asian regions. As a result, Binance became highly motivated to partner with a strong stablecoin issuer that complies with the new MiCA regulations. The exchange ultimately opted to align with USDC.

Interestingly, in 2022, Circle CEO Jeremy Allaire criticized Binance’s decision to cease support for USDC, arguing that converting stablecoins like USDC, USDP, and TUSD into BUSD would effectively eliminate USDC trading on the platform. At the time, Binance’s primary focus was to enhance liquidity and capital efficiency by promoting its native stablecoin.

Two years later, Binance made substantial changes to its business model, paving the way for this partnership. The exchange’s new CEO, Richard Teng, concluded that collaborating with the world’s most regulated stablecoin was a strategic move worth pursuing.

Competition with Tether 

Stablecoins have become a critical component of traditional finance, fueling an increasingly fierce battle for market leadership. The partnership between Binance and Circle emerges in a market still dominated by Tether (USDT).

Tether has long faced scrutiny for its lack of transparency regarding reserves and alleged ties to criminal organizations using USDT for money laundering. In contrast, USDC, backed by Circle's strong regulatory relationships in the U.S., is viewed as a more reliable asset, appealing to conservative financial institutions.

As of this writing, USDT and USDC remain the top stablecoins in the cryptocurrency market. According to Binance, USDT holds a significant edge in market capitalization and trading volume, making it the most liquid stablecoin.

Tether (USDT):

• Market capitalization: approximately $137.44 billion
• 24-hour trading volume: approximately $63.72 billion
• Price: $0.9999

Market data for USDT. Source: CoinMarketCap

USD Coin (USDC):

• Market capitalization: approximately $45.46 billion
• 24-hour trading volume: approximately $4.16 billion
• Price: $0.9999

Market data for USDC. Source: CoinMarketCap

Tether remains the dominant stablecoin, even as the Binance-Circle alliance seeks to challenge its position. This sustained dominance is driven by two primary factors:

1. USDT enjoys significant popularity in countries outside the European Union that actively embrace cryptocurrencies, such as Georgia, Uruguay, Uzbekistan, Ukraine, Russia, and nations across the Middle East. It is also a go-to stablecoin in developing African countries with limited access to traditional banking services.
2. Despite ongoing criticism for its lack of certified audits, Tether’s “flexibility” has enabled it to maintain a strong user base among individuals who are less concerned with strict regulatory oversight. In contrast, Circle’s focus on conservative U.S. and European investors, who prioritize compliance with legal standards, has limited USDC’s appeal among retail traders in regions with economic instability.

The question remains: Can the Binance-Circle alliance meaningfully challenge Tether’s dominance, which is firmly rooted in its adoption across emerging markets?

At the same time, the stablecoin market is large enough to support multiple major players, making it likely that competition will only continue to intensify.