Crypto traders pull $3 billion from stablecoin USDC in three days

By Elizabeth Howcroft

LONDON (Reuters) – Crypto traders pulled round $3 billion general from the stablecoin USDC in three days, the corporate behind the token mentioned in a weblog submit on Thursday, as traders rushed to redeem their holdings within the wake of the collapse of Silicon Valley Financial institution.

USDC broke its greenback peg on Saturday after Circle revealed that $3.3 billion of the coin’s reserves have been at SVB.

The stablecoin fell to as little as $0.88, in response to CoinGecko knowledge, however returned to $1 on Monday. Circle introduced it might enable automated USDC redemption via a brand new banking relationship, with Cross River Financial institution.

Stablecoins are cryptocurrencies designed to keep up a relentless alternate charge with conventional currencies. USDC is the second-biggest stablecoin with a market cap of $37.6 billion.

From Monday to Wednesday, Circle processed $3.8 billion of USDC redemptions (traders swapping their tokens again into U.S. {dollars}) and created $0.8 billion extra of the token, Circle’s weblog submit mentioned, which means traders have pulled round $3 billion general within the three days.

The fast outflows come after U.S. banking regulators issued a contemporary warning final month that crypto-related deposits in banks may very well be topic to liquidity dangers. The regulators highlighted deposits linked to stablecoins as inclined to volatility during times of market stress if there’s a fast inflow of redemption requests.

Up to now week, traders have pulled a internet $6 billion from the coin, in response to CoinGecko knowledge.

“The occasions of the previous week have impacted the liquidity operations for USDC,” Circle mentioned.

“We are going to proceed efforts so as to add extra transaction banking companions.”

(Reporting by Elizabeth Howcroft; Modifying by Sharon Singleton)