On Friday evening, Coinbase made the announcement that it would no longer facilitate currency conversions between US dollars and the stablecoin USDC.
The company announced in a tweet that conversions between USDC and USD would be temporarily halted over the weekend since banks would be closed. “During moments of increased activity, USD transfers from banks that clear during normal banking hours are relied on in order for conversions to take place,”
Typically, the company provides its traders with a function that enables them to convert USD for USDC in an effortless manner. On Monday, Coinbase intends to begin the process of reactivating the functionality.
The announcement occurred just a few moments after Circle acknowledged that its USDC had exposure to Silicon Valley Bank, which had become the largest bank to fail since the 2008 financial crisis. Silicon Valley Bank had failed earlier on Friday. On Friday, the California agency that regulates financial institutions took control of the bank and placed it under the supervision of the FDIC. The failure of Silicon Valley Bank occurred not long after cryptocurrency-friendly Silvergate announced that it would be liquidating.
Silicon Valley Bank is one of six banking partners that Circle use for the management of the approximately 25 percent of USDC reserves that are stored in cash, according to a tweet that was sent out by Circle late on Friday. “Circle and USDC continue to operate regularly while we wait for clarity on how the FDIC receivership of SVB will impact the depositors of that institution,”
In a later tweet, Circle revealed that the current value of its exposure was $3.3 billion. “Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the approximately $40 billion of USDC reserves remain at SVB,” Circle said in a tweet. “This is in response to the fact that the wires initiated on Thursday to remove balances were not yet processed.”
Both Circle and Coinbase are responsible for the management of USDC, which was established in 2018.
