Coinbase halts conversion feature between U.S. dollars and USDC

Coinbase said Friday evening that it halted support for conversions between U.S. dollars and stablecoin USDC.

“We are temporarily pausing USDC:USD conversions over the weekend while banks are closed,” the firm said in a tweet. “During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours.”

The firm typically offers traders a features that allows them to seamlessly exchange USD for USDC. Coinbase plans to restart the feature on Monday. 

The news came moments after Circle confirmed its USDC had exposure to Silicon Valley Bank, which earlier Friday became the largest bank to fail since the 2008 financial crisis. California’s financial regulator seized control of the bank Friday and put it in FDIC receivership. Silicon Valley Bank’s collapse came shortly after crypto-friendly Silvergate said it was liquidating. 

“Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25%  portion of USDC reserves held in cash,” Circle said in a tweet late Friday. “While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.”

Circle later said in a tweet that its exposure stood at $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 ~$40 billion of USDC reserves remain at SVB,” Circle said in a tweet. 

Circle and Coinbase both manage USDC, which was founded in 2018.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.