Cryptocurrency Exchanges Binance (CRYPTO, BNB) Coinbase Global Inc (NASDAQ:COIN) the two most widely used digital currency trading platforms, have temporarily halted USD Coin (CRYPTO USDC: USDC) conversions due to uncertainties surrounding the recent collapse of Silicon Valley Bank, a subsidiary SVB Financial Group (NASDAQ:SIVB).
USDC is a stablecoin created by a firm known as Circle which held a portion of USDC’s cash reserves at Silicon Valley Bank. The bank was closed down by the California financial regulator.
Binance opted to suspend auto-conversion from USDC to BUSD, citing “current market conditions” without providing further details about Silicon Valley Bank.
ENTER TO WIN $500 CRYPTO & STOCK
Enter your email to get a complimentary copy of Benzinga’s ultimate morning update and a $30 gift card for free!
The exchange explained that this was a “normal risk-management procedural step to take while we monitor the situation.”
Binance has temporarily suspended auto-conversion of USDC to BUSD due to current market conditions, especially related to high inflows & the increasing burden to support the conversion.
This is a common risk-management procedure to follow while we monitor the situation.
— Binance (@binance) March 11, 2023
Coinbase, the largest crypto platform in the US, halted USDC conversions to USD during the weekend when banks were closed. When banks reopened, Coinbase said that conversions would resume, noting that “during periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours.”
As banks are closed, USDC to USD conversions are temporarily suspended. During times of high activity, conversions depend on transfers from banks that clear during normal hours. When banks open on Monday, we plan to resume conversions.
— Coinbase (@coinbase) March 11, 2023
Circle revealed that USDC’s cash support of $3.3 billion is still locked in Silicon Valley Bank. It was one of six banks used by the company to secure 25% of USDC reserves.
Also read: South Dakota Governor Vetoes Bill To Exclude Bitcoin, Ethereum, Other Cryptos From Money Definition