Coinbase (COIN) put the brakes on conversions between USDC stablecoin and US dollars late Friday as the fallout from the Silicon Valley Bank (SIVB) collapse spread to the heart of crypto trading.
In a tweet, the crypto exchange said it was “temporarily pausing” conversions while banks are closed over the weekend. The exchange said it planned to resume conversions on Monday.
The pause speaks to the chaos that has rocked the crypto industry’s second-largest stablecoin in the wake of Silicon Valley Bank’s demise on Friday. Speculating on the stability of USDC, traders traded in $1.6 billion worth of USDC, causing total supply to fall.
Late in the day, Circle confirmed that $3.3 billion of the $40 billion backing its stablecoin was on deposit with the now-closed lender. The fate of that money is now uncertain as Silicon Valley Bank has been seized by the FDIC and USDC has – for now – lost its dollar peg.
“Circle is currently shielding USDC from a black swan failure in the US banking system,” tweeted Circle Chief Strategy Officer Dante Disparte late Friday night. “Silicon Valley Bank is a critical bank in the U.S. economy and its failure — without a federal bailout — will have broader implications for business, banking and entrepreneurs.”
“During periods of increased activity, conversions depend on USD transfers from the banks cleared during normal banking hours,” Coinbase said in its tweet announcing the conversion pause. “When the banks open on Monday, we plan to restart conversions.”
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