#TradingPairs101 Both of the largest cryptocurrency exchanges, Binance and Coinbase (NASDAQ:COIN), announced late Friday that they would temporarily suspend USDC transfers as the contagion from the collapse of Silicon Valley Bank spreads.
These actions came amid fears that Circle, the company behind the USDC stablecoin, holds some cash reserves for USDC at Silicon Valley Bank, which was shut down by California's financial regulator on Friday. (USDC was originally launched by Center, a joint venture between Coinbase and Circle).
Citing 'current market conditions' without naming Silicon Valley Bank, Binance stated that it has temporarily suspended the automatic conversion from USDC to BUSD.
The post stated: 'This is a normal procedural step for risk management that must be taken while monitoring the situation.' Following Binance's announcement, Coinbase, the largest cryptocurrency exchange in the United States, said it would suspend the conversion of USDC to U.S. dollars during the bank closures over the weekend.
Coinbase stated: 'During periods of heightened activity, transfers depend on U.S. dollar transfers from banks that are cleared during regular banking hours,' without explicitly naming Silicon Valley Bank, adding that transfers would resume on Monday when banks reopen.
The collapse of SVB on Friday sent shockwaves throughout the technology industry. Crypto companies were not spared, with several firms revealing their current exposure to the California bank, including Circle, Pantera, Avalanche, and the bankrupt BlockFi.
Finally, late Friday night, Circle revealed that $3.3 billion worth of USDC cash backing remains locked in Silicon Valley Bank. The company stated that Silicon Valley Bank is one of six banks used by Circle to manage 25% of USDC reserves.
'Like other customers and depositors who relied on SVB for banking services, Circle joins calls for the continuity of this important bank in the U.S. economy and will follow the guidelines provided by governmental and federal regulators,' Circle wrote.
The trading price of USDC, designed to remain pegged at $1, dropped to $0.93, according to CoinGecko. The last time USDC saw these levels was in May 2019, when the stablecoin hit an all-time low of $0.89.
Circle wrote: 'While we await clarification on how the federal insurance conservatorship (SVB) will affect its depositors, Circle & USDC continue to operate normally.'
Crypto Horizon