Cryptocurrency exchange Coinbase (COIN) has temporarily suspended conversions between its USDC stablecoin and U.S. dollars in the wake of the collapse of Silicon Valley Bank (SIVB).
The bank’s shutdown has sent shockwaves throughout the crypto industry, and Coinbase’s pause is the latest example of the chaos it has caused.
The exchange announced on Twitter the suspension, citing bank closures over the weekend as the reason for the move.Moreever, Coinbase plans to restart conversions on Monday.
@circle is currently protecting #USDC from a black swan failure in the U.S. banking system. @SVB_Financial is a critical bank in the U.S. economy and its failure – without a Federal rescue plan – will have broader implications for business, banking and entrepreneurs. https://t.co/CYi6Z26ngH
— Dante Disparte (@ddisparte) March 11, 2023
UDC’s stability suffered as Silicon Valley Bank collapsed, resulting in traders redeeming $1.6B of stablecoin, causing total supply to decline.
In the late hours of the day, Circle announced that it had deposited $3.3 billion of its $40 billion stablecoin backing in a now-closed bank.
The FDIC seizing the bank and USDC temporarily losing its dollar peg leaves uncertainty about the fate of the cash.
Circle Working To Protect USDC
Circle, the issuer of USDC, is taking measures to safeguard the stablecoin from potential U.S. banking system failures. Furthermore, the company’s Chief Strategy Officer, Dante Disparte, confirmed this.
The failure of Silicon Valley Bank without a federal rescue plan will impact businesses and entrepreneurs. An individual stated this and added that the implications will have a broad impact.
Coinbase has temporarily halted conversions because banks do not transfer USD on weekends. Coinbase intends to resume the conversions as soon as banks reopen on Monday.
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
Silicon Valley Bank’s collapse has led to chaos in the crypto industry. The pause in USDC to USD conversions is the latest indication of this. However,it remains to be seen how USDC and other cryptocurrencies will be impacted in the long term.