Binance and Coinbase Halt USDC Transfer – Is Circle’s USDC Next in Line for a UST-Style Collapse?
Coinbase and Binance, two of the world’s largest cryptocurrency exchanges, have taken action in response to Circle’s stablecoin, USD Coin (USDC), suffering a de-peg following the collapse of Silicon Valley Bank (SVB).
Coinbase Halts USDC to USD Conversion
Coinbase has temporarily halted its USDC to USD conversion and requested that users wait until Monday when banks will reopen. The exchange has cited heightened market activity and the resulting withdrawals through banks as the reason for the suspension of conversions.
Binance Adds Stablecoin Trading Pairs
In contrast, Binance has taken a different approach by adding several new stablecoin trading pairs, running fee promotions and offers for users. These pairs include BNB/TUSD, BTC/TUSD, ETH/TUSD, TUSD/USDT, USDC/USDT, and USDP/USDT spot trading pairs. These trading pairs will be available for trading on March 11, 2023, at 14:00 (UTC).
According to Lookonchain, several crypto institutions have made substantial deposits of USDC into Circle or bought back USD in the past 24 hours. Coinbase, for instance, has deposited $1.97 billion into Circle, while an unknown organization with addresses starting with “0x3356” has transferred significant amounts of USDC to various platforms.
This deposit of USDC into Circle and the buyback of USD by some crypto institutions may be an attempt to stabilize the value of their crypto holdings amidst market fluctuations.
USDC Depeg Raises Concerns
USDC has dropped from its $1 peg and is currently exchanging hands at $0.89 at press time. This depeg has caused rising fears, uncertainty and doubt (FUD) among crypto market participants and has led to concerns that USDC may suffer the same fate as Terra’s algorithmic stablecoin UST.
Circle’s stablecoin has reached a 24-hour low of $0.88, prompting Coinbase and Binance to take proactive measures to mitigate the potential risks.