Crypto Exchanges Coinbase and Binance Suspend USDC Conversions, Rattled by Depegging Concerns

Top cryptocurrency exchanges Binance and Coinbase have temporarily suspended USDC conversions, adding to the panic in the crypto market.

The suspensions came after Circle, the issuer of USDC stablecoin, revealed that some of the cash reserves backing USDC remain held at Silicon Valley Bank, which was shut down by California’s financial regulator on Friday.

Binance suspended auto-conversion of USDC to BUSD, citing “current market conditions,” while Coinbase said it would suspend USDC conversion to USD while banks are closed over the weekend.

Binance has temporarily suspended auto-conversion of USDC to BUSD due to current market conditions, specifically related to high inflows & the increasing burden to support the conversion.

This is a normal risk-management procedural step to take while we monitor the situation.

— Binance (@binance) March 11, 2023

We are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions.

— Coinbase 🛡️ (@coinbase) March 11, 2023

The collapse of Silicon Valley Bank has sent shockwaves across the tech industry, with several companies revealing their current exposure to the California bank, including Circle, Pantera, Avalanche, and bankrupt crypto firm BlockFi.

Circle also disclosed that $3.3 billion worth of the cash backing USDC remains locked in Silicon Valley Bank, which is one of six banks Circle uses for managing 25% of USDC reserves.

TagsCrypto