Crypto exchange Coinbase said Friday it is temporarily suspending the conversion between stablecoin USDC and USD over the weekend, after the stablecoin’s creator Circle said about $3.3 billion, or more than 8% of over $40 billion USDC reserves, are held at Silicon Valley Bank, which collapsed on Friday.
USDC USDCUSD, -7.46%, which is co-supported by Coinbase COIN, -8.00% and Circle, is the world’s second-largest stablecoin.
Coinbase said it would resume the conversions between USDC and USD on Monday. “During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours,” the company tweeted Friday.
“Your assets remain safe & available for on-chain sends,” Coinbase added.
Amid concerns over contagion brought by Silicon Valley Bank, investors cashed out more than $2.3 billion USDC in the 24 hours leading to Friday evening, according to data from Nansen.
While most of the USDC reserves are invested in Treasuries, close to $9 billion of them were held in cash at banks including Bank of New York Mellon BK, -1.44%, Citizens Trust Bank, Customers Bank, New York Community Bank, a division of Flagstar Bank, N.A., Signature Bank SBNY, -22.87%, Silicon Valley Bank and Silvergate Bank SI, -11.27% as of Jan.31, according to an attestation report in March.
The Federal Deposit Insurance Corporation has taken over more than $175 billion in deposits at Silicon Valley Bank. FDIC’s standard insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category.
The rest of the depositors are uninsured — they will be paid an advance dividend within the next week and get receivership certificates for their balances, FDIC said. Whether and how much depositors with over $250,000 would get their money back, depends on the amount of money FDIC receives from selling Silicon Valley Bank’s assets.
Representatives at Circle and Coinbase didn’t respond to requests seeking comment.
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