Binance Holds 87% of USD1 Stablecoin Supply, On-Chain Data Shows

This article was first published on The Bit Journal.

The market is used to stablecoins being big, liquid, and widely distributed, but the latest on-chain breakdown around the USD1 stablecoin is raising eyebrows for a different reason: where the supply is sitting.

Based on blockchain wallet clustering and exchange balance estimates cited in recent reporting, roughly $4.7B of the token is held in wallets associated with a single trading venue, out of about $5.4B circulating. That works out to close to 87% of the float concentrated in one place.

In plain English, most holders are not spread across many apps and custody setups. Instead, a very large share appears to be parked where trading happens, which changes the risk profile even if the peg remains stable day to day.

Why the USD1 stablecoin concentration is the real story

The USD1 stablecoin is marketed as a dollar-pegged token backed by cash and cash equivalents, with regular reporting and redeemability framed as core promises. Those claims matter, but distribution matters too, because distribution is what decides how a stablecoin behaves during stress.

When supply is heavily concentrated on one venue, three issues get louder.

First is liquidity optics versus real liquidity. Order books can look deep because inventory is nearby, but if that venue tightens risk controls, changes listing terms, or faces restrictions in a key corridor, liquidity can thin quickly for everyone else.

Second is redemption routing. Even if reserves exist and redemptions are allowed, the practical path to redemption often runs through the dominant venues and their banking relationships. When one venue becomes the center of gravity, the stablecoin starts to inherit that venue’s operational and regulatory risks.

Third is governance by gravity. No formal voting may be involved, yet market influence still forms. A dominant holder base in one place can shape flows, spreads, and adoption decisions without needing an explicit governance mechanism.

The key indicators traders should watch now

For readers trying to assess stablecoin risk without getting lost in jargon, a handful of indicators usually tells the truth.

Peg stability is the first. The token should stay close to $1.00 across major pairs, not only on one venue but across multiple venues and chains. A stable print on one exchange is less comforting if other venues show persistent discounts.

Market cap and turnover are next as a stablecoin with a multi-billion float and meaningful daily volume can still be fragile if the volume is concentrated where the float is concentrated. The headline signal is size, but the real signal is where the turnover is occurring.

Reserves and transparency are the third. The issuer’s reserve reports, frequency, and clarity around what “cash equivalents” means should be read like a bank statement summary. The more specific the breakdown, the easier it is for the market to price risk.

Finally, watch on-chain flows. Large, repeated transfers from treasury style wallets into the dominant venue can indicate that distribution is not broadening, even if adoption narratives are.

How this ties into institutional narratives

The USD1 stablecoin did not become a talking point in a vacuum. It has been referenced in connection with a high-profile cross-border deal narrative involving a major Gulf-backed investment group and a large crypto exchange.

That context matters because institutional pathways often favor operational simplicity. If a large transaction corridor prefers one venue, supply tends to accumulate there. Over time, the stablecoin can look “successful” by market cap while still being structurally dependent on a narrow set of pipes.

Conclusion

The USD1 stablecoin story is not only about whether it can hold $1.00 on a quiet day. It is about how it behaves when markets get noisy. With close to 87% of circulating supply reportedly sitting on one exchange, the token’s biggest variable becomes distribution, not branding.

If that concentration eases over time, the USD1 stablecoin begins to look more like a mature payment rail. If it does not, then every operational decision at the dominant venue becomes a first-order market risk for the token.

Disclaimer

This article is for informational purposes only and does not constitute investment, legal, or financial advice. Digital assets carry risk, and readers should do independent research and consult qualified professionals before making decisions.

Frequently Asked Questions

What does it mean that one venue holds 87% of supply?
It means most tokens are parked where trading happens, which can amplify venue-related risks.

Does concentration automatically mean the peg will break?
No. It means liquidity and redemption pathways can become fragile during stress.

What should observers track week to week?
Peg deviations across venues, reserve reporting quality, and whether supply spreads to more wallets and platforms.

Is this mainly a trading issue or a payments issue?
Both. Trading works until liquidity conditions change, and payments need broad distribution to be resilient.

Glossary of key terms

Circulating supply: The amount of a token that is available in the market rather than locked or unissued.

Peg: The target price relationship, here designed to stay near $1.00.

Redemption: The process of swapping the stablecoin back into fiat value through the issuer or approved channels.

Liquidity: How easily a token can be bought or sold without moving the price significantly.

Reserve assets: The cash, treasury instruments, or equivalents that are intended to back the stablecoin’s value.

Concentration risk: Risk that grows when a large share of supply, activity, or control sits in one place.

Sources

binance

Forbes

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