Silicon Valley Bank Contagion Spreads to USDC

Stablecoin USDC issuer Circle is now facing the heat from SVB shutting down its services.

Confirmation from Circle of $3.3 billion of its total of $40 billion in USDC reserves are with Silicon Valley Bank.

Investors have moved rapidly for redemption resulting in the Circle stablecoin drifting from the dollar peg.

Friday evening saw the peg drop to $0.985 clearly reflecting investors’ concerns considering its uncharacteristically high volatility. 

Coinbase has announced its decision to suspend USDC/USD conversions for the weekend amid the ultra-high volatility.

Binance followed suit tweeting, “we are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity. When banks open Monday, we plan to re-commence conversions. Assets remain safe & available for on-chain sends.”

Auto conversion of USDC to BUSD has been temporarily suspended by Binance citing current market conditions related to high inflows and increasing burden to support the conversions.

Investors have cashed out almost $8 billion worth of USDC from centralized exchanges over the last 24 hours as per latest data.

Next would be big exchanges suspending conversions making it interesting to see the impact this will have.