On Saturday, March 11, 2023, the cryptocurrency market was shaken as a few stablecoin assets began to show signs of depegging from their $1 parity. The second-largest stablecoin USDC, issued by Circle Financial, dropped to a low of $0.877 per coin. Additionally, around five other stablecoins slipped below the U.S. dollar parity during the early morning (ET) trading sessions on Saturday.
Major Crypto Exchanges Temporarily Suspend USDC Trades
On March 11, 2023, stablecoin assets experienced a challenging day after Circle Financial announced that $3.3 billion of the cash backing usd coin (USDC) was held at Silicon Valley Bank (SVB). This news caused USDC to depeg from the U.S. dollar, and it reached a low of $0.877 per coin on Saturday. As of 7:45 a.m. ET, USDC is currently trading at $0.91 per unit, up 3% from the low of $0.87.
We are temporarily pausing purchases using USDC on Ethereum and Polygon. We have also paused loads to the BitPay Card in the app. Further updates will follow here.
— BitPay (@BitPay) March 11, 2023
Subsequent to the depegging of USDC, several major crypto exchanges, including Binance and Coinbase, temporarily suspended USDC trades. “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,” Binance tweeted. “This is a normal risk-management procedural step to take while we monitor the situation.”
Coinbase stated: “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.” The crypto payment processor Bitpay has also paused USDC payments and debit card loads.
The Singapore-based crypto exchange Crypto.com also suspended USDC deposits on March 11. “Out of an abundance of caution, we have temporarily suspended USDC to USD conversion, USDC deposit, and USDC pair trading due to current market conditions. USDC withdrawal remains available,” the company said on Saturday. “We will continue to evaluate the situation and plan to resume USDC trading as soon as possible.”
The depegging of USDC has had a knock-on effect on five other stablecoin projects, including GUSD, DAI, FRAX, USDP, and USDD. FRAX is currently trading for $0.91, USDD is swapping for $0.94, USDP is trading for $0.95, DAI is changing hands for $0.92, and GUSD is trading for $0.97 per unit. The largest stablecoin by market capitalization, tether (USDT), has remained within the $0.99 to $1 range since the SVB issues began.
What do you think of the current state of stablecoins? Let us know your thoughts in the comments section below.