The volume-leading cryptocurrency exchange Binance is re-enabling USDC pairs that it suspended conversions. At the time of the announcement, USDC was recovering its dollar peg.
Centralized exchanges freeze USDC pairs, citing “market conditions”
Major central exchanges suspended USDC conversions after Circle, the company behind the USDC stablecoin, announced that some of its cash reserve was stuck at Silicon Valley Bank. Binance and Coinbase spearheaded the critical USDC decision amid bank bankruptcies on Friday night.
Citing “current market conditions,” without naming Silicon Valley Bank, Binance said it has temporarily suspended the automatic conversion of USDC to BUSD.
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.
This is a normal risk-management procedural step to take while we monitor the situation.
— Binance (@binance) March 11, 2023
“During peak activity periods, conversions are based on USD transfers that are cleared during banks’ normal banking hours,” said Coinbase, which did not explicitly mention the name of Silicon Valley Bank, adding that conversions will resume on Monday when banks reopen.
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
Binance opens USDC pairs back to trading
Binance has now announced in a new announcement that it has now activated trading pairs BNB/USDC, BTC/USDC, and ETH/USDC on Spot. According to the announcement, the BTC/USDC spot pair is also being removed from the Zero Fee Bitcoin program.
This news comes just one day after Binance restarted USDC trading with the USDC/USDT pair. The move to temporarily halt USDC’s automatic conversion to BUSD was due to high inflows and increased load to support the conversion seen by the exchange as a standard risk management procedure.
https://twitter.com/binance/status/1634761779665567745
According to the announcement by Binance, trading for the new pairs was reopened on March 12. Users can now trade Binance Coin (BNB), Bitcoin (BTC), and Ethereum (ETH) against USDC stablecoin.
USDC about to regain dollar peg
Twitter’s Adam Cochran noted that the market and USDC are starting to stabilize again as the USDC stabilizes the dollar and the FUD likely subsides. As Kriptokoin.com, we have included the statements made by North Rock Digital CEO Hal Press and Ethereum founder Vitalik Buterin while USDC fluctuated.
It is worth noting here that USDC is the latest victim of the stablecoin family. The BUSD saga precedes the time when issuer Paxos stopped issuing new Binance USD tokens at the behest of a New York regulator last month.
BUSD, the world’s third-largest stablecoin, has shrunk significantly over the past few weeks in terms of volume. BUSD started the year with a market cap of $16.5 billion. By March, the figure had fallen more than 40% to $9.6 billion, the lowest in two years. What happened to USDC was the result of the crisis in the banking industry.
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