USDC Stablecoin Depegging Concern Spreads to 5 Other Stablecoins
Stablecoin assets depegged on Saturday, March 11, 2023, causing widespread concern among crypto advocates. The second-largest stablecoin, USDC, issued by Circle Financial, fell below USD 0.90, reaching a low of USD 0.877 per coin. Additionally, five other stablecoins dropped below the US dollar parity during the early morning (ET) trading sessions on Saturday.
Major Crypto Exchanges Suspend USDC Trading
Stablecoin assets had a rough day on March 11, 2023, after
Circle Financial announced that USD 3.3 billion of the
cash-backed USD coin (USDC) was held at Silicon Valley Bank (SVB). The news caused
USDC to depeg from the US dollar, dropping to a low of USD 0.877 per coin on
Saturday. USDC was trading at USD
0.91 per unit, up 3% from the low of USD 0.87.
Following the depegging of USDC, several major crypto exchanges,
including Binance and Coinbase, suspended USDC trading. "Binance has temporarily
suspended the auto-conversion of USDC to BUSD due to current market conditions,
specifically high inflows and 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."
Depegging Ripple Effect on Other Projects
The depegging of USDC has caused a ripple effect of depegging
issues for five different stablecoin projects, including
GUSD, DAI, FRAX, USDP, and USDD. FRAX was trading for USD 0.91, USDD was
swapping for USD 0.94, USDP was trading for USD 0.95, DAI was changing hands
for USD 0.92, and GUSD was trading for USD 0.97 per unit. The largest
stablecoin by market capitalization, tether
(USDT), has remained within the USD 0.99 to USD 1 range since the
SVB issues began.
What is your take on the challenges facing stablecoins today?
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