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- Circle says $3.3 billion worth of USDC reserves are still at Silicon Valley Bank.
- Coinbase and Binance temporarily halt USDC:USD conversions.
It will be a long weekend for the cryptocurrency market and the broader fintech industry. With the crash of Silvergate and Silicon Valley bank, both crypto holders and traditional investors are at risk of incurring major losses.
For crypto investors and traders alike, particularly holders of the USDC stablecoin, the market is presenting a lot of speculation on whether or not users’ funds are safe.
Circle, the peer-to-peer payments technology company that manages the popular stablecoin USDC, has made a concerning announcement regarding USDC reserves.
The firm has taken to Twitter to explain that a significant amount of USDC reserves is still under the possession of Silicon Valley Bank. Circle disclosed that although $40 billion worth of USDC was moved, the wires put in place to evacuate the remaining $3.3 billion have yet to be processed.
1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.
— Circle (@circle) March 11, 2023
Circle went on to observe the importance of Silicon Valley Bank. The firm acknowledged that the bank was of major significance to customers and depositors who looked to it for banking services. Circle, like a handful of other fintech firms, is appealing that the continuity of the bank is important to the economy of the United States. Should regulatory bodies allow for SVB to continue market activities in the future, Circle maintains that it will adhere to the guidance provided by state and Federal regulators.
Binance and Coinbase suspend USDC:USD conversions in the meantime
Meanwhile, leading cryptocurrency exchanges like Binance and Coinbase have halted USDC:USD conversions for the rest of the weekend, as banks close for the week. From Monday onwards, users will be able to carry out conversions. Coinbase remarked
“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. Your assets remain safe & available for on-chain sends.”
Similarly, Binance also announced that USDC to BUSD conversions will be halted temporarily. Binance cited the current unfavorable market conditions as a reason for its decision. It further disclosed that the move is a typical risk-management procedure required that the exchange has taken, while it continues to monitor the state of the market.
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
Giving insight into the current situation, a Twitter user revealed the locations of USDCs across different platforms.
USDC has 11.4b split between 7 banks. Two were SVB and SI. BNY Mellon likely holds the majority of assets (it’s safest, if they wanted yield they’d be in treasuries). If 20% is in SVB and haircut on SVB is 92% (aggressive) then backing of USDC is cut by 182m, which is easily absorbed by CB balance sheet
USDC has 11.4b split between 7 banks. Two were SVB and SI. BNY Mellon likely holds the majority of assets (it's safest, if they wanted yield they'd be in treasuries). If 20% is in SVB and haircut on SVB is 92% (aggressive) then backing of USDC is cut by 182m, which is easily… pic.twitter.com/LUKTP10tkn
— Avi (@AviFelman) March 10, 2023
According to our data, at press time, USD Coin (USDC) is trading at a price of $0.89, after losing over 7% in price value in the last 24 hours, as well as the last 7 days.
