Binance And Coinbase Scramble To Halt USDC Conversions Amid Silicon Valley Bank Chaos

Cryptocurrency exchanges Binance (CRYPTO: BNB) and Coinbase Global Inc (NASDAQ: COIN), two of the top cryptocurrency exchanges, announced temporary suspensions of USD Coin (CRYPTO: USDC) conversions due to concerns about the fallout from the collapse of Silicon Valley Bank , a subsidiary of SVB Financial Group (NASDAQ: SIVB). The move followed worries that Circle, the company behind USDC stablecoin, held some of USDC's cash reserves at Silicon Valley Bank, which California's financial regulator shut down.

Timeline of Usd-coin

USDC Coin Price News: The cryptocurrency market displayed signs of recovery amid concerns of liquidity issues stemming from the failure of two US banks —  Silvergate and Silicon Valley Bank. But the depegging of USD Coin (USDC) is reminiscent of the Terra stablecoin terraUSD (UST) in 2022.

Arthur Hayes thinks fiat-backed stablecoins like the USDC, USDT, and others pose a risk to the bonds market, and this is the primary concern for the United States Treasury Department.

Stablecoin issuer Circle's USD Coin (USDC) redemptions reach over $2.5 billion in the last 24 hours. Investors move away from USDC stablecoin as Silicon Valley Bank (SVB), one of the six banking partners that managed 25% of reserves, was closed by a U.S. regulator and transferred to the U.S. FDIC to protect depositors.

Late on Friday, as the impact from the collapse of Silicon Valley Bank (SIVB) crept into the core of cryptocurrency trading, Coinbase (COIN) put a halt to conversions between the USDC stablecoin and US dollars.

The stablecoin world is once again facing uncertainty as the world's second-largest stablecoin, USD Coin (USDC), faces a potential black swan event that could lead to the collapse of the entire stablecoin ecosystem. However, experts suggest that USDC's situation is broadly different from the UST collapse of 2022.

The two biggest cryptocurrency exchanges, Binance and Coinbase, have revealed that they would temporarily suspend USDC conversions on their platforms. This comes in the aftermath of the collapse of US lender Silicon Valley Bank and concerns about its effect on USDC.

USDC Crash News: Silicon Valley Bank collapse turns out to be the biggest bank to fall since the financial crisis erupted in 2008. However, this crisis has also indulged the cryptocurrency industry with it.

The issuer of the second-largest stablecoin Circle has stated that it held an undisclosed portion of its $9.8 billion cash reserves at the failed Silicon Valley Bank as of 17th January 2023.  Circle Still Has $3.3 Billion Held Up At SVB  According to Circle's latest attestation, the US-based stablecoin issuer holds a part of the USDC's cash reserves at Silicon Valley Bank.

Circle's latest audit report reveals that the company's exposure to the US banking system stands at nearly $9 billion, with its reserves held by a number of regulated financial institutions, including SVB, BNY Mellon, and Silvergate. However, recent events such as the shutdown of SVB and Silvergate's decision to shut down its crypto bank arm have raised concerns about potential risks for Circle and its stablecoin USDC.

USDC, the stablecoin tracing the USD, is under immense pressure as users rush to convert to other assets, including BUSD by Paxos and USDT by Tether Holdings. USDC Has De-pegged As USDC's market cap rapidly shrinks, primarily because of mass exits, there has been a de-peg.