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Coinbase (COIN) hit the brakes on conversions between USDC stablecoin and US dollars late Friday as fallout from Silicon Valley Bank’s (SIVB) collapse spread into the heart of crypto trading.
In a tweet, the crypto exchange said it was “temporarily pausing” the conversions while banks are closed over the weekend. The exchange said it planned to restart conversions on Monday.
The pause speaks to the chaos that’s roiled 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 redeemed $1.6 billion of USDC, lowering its total supply.
Late in the day, Circle confirmed that $3.3B of the $40B backing its stablecoin was on deposit at the now-shuttered lender. The fate of that cash is now uncertain, with Silicon Valley Bank having been seized by the FDIC, and USDC – for the moment – has lost its dollar peg.
“Circle is currently protecting USDC from a black swan failure in the U.S. 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 rescue plan – will have broader implications for business, banking and entrepreneurs.”
“During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours,” Coinbase said in its tweet announcing the conversion pause. “When banks open on Monday, we plan to re-commence conversions.”
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