USDC Operations Unfazed by Silicon Valley Bank Seizure, But Coinbase Hits Pause
Coinbase, a popular cryptocurrency exchange, has temporarily suspended conversions from USD to USDC over the weekend due to the closure of banks.
The company tweeted:
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.
— Coinbase (@coinbase) March 11, 2023
The announcement came after Circle, another company that manages USDC, confirmed that its reserves had exposure to Silicon Valley Bank. The bank was seized by California’s financial regulator on Friday, making it the largest bank to fail since the 2008 financial crisis.
Despite this, Circle stated that it and USDC are operating normally and that its exposure to Silicon Valley Bank stands at $3.3 billion.
According to Circle, Silicon Valley Bank is one of six banking partners it uses to manage the 25% portion of USDC reserves held in cash.
The collapse of Silicon Valley Bank followed the news that Silvergate, a crypto-friendly bank, was liquidating.
Both Circle and Coinbase manage USDC, a stablecoin founded in 2018 that is pegged to the value of the US dollar.
The temporary pause on conversions by Coinbase highlights the reliance of stablecoins on traditional financial institutions, such as banks, for their operations.