Coinbase Pauses Conversions Between USDC and U.S. Dollars as Banking Crisis Roils Crypto

RedDuke said:
John I want to thank you!!! You were the one who explained to me potential USDC issue over a month ago. I just used it then to buy more ether. Glad I did it :D
More...

You're welcome, RedDuke, but this particular issue is not what why I avoid USDC, it's because of US restrictions and censorship, i.e. OFAC

In some ways, though, this is somewhat related to some of my concerns when holding USDC tokens and having a counterparty that is US-based and subject to US institutional failures
 
USDC traded as low as 87 cents and now above 93 cents, but is there an opportunity here?

USDC is not like Luna UST that had a death spiral to $0 due to the mechanics of algorithmic stablecoin peg-defense

So, let's think about this for a little bit, USDC lost 10% of the funds backing 1-to-1 fiat due to one of their banks failing, but the "market" where USDC is traded, i.e. dexes or cexes, don't have "awareness of facts", but rather trade on sentiment

Sure, regular traders or USDC holders lost the ability to redeem for US $ until Coinbase opens the USDC-USD market again, but USDC is still tradeable against other cryptos and in other cexes and dexes

I think USDC will go back to its peg $1 since I don't think Circle, the USDC issuer is going bankrupt

One big risk is the US regulators and "protectors" of investors may shutdown USDC... perhaps to issue their CBDC as replacement which could cause issues with non-US holders of USDC



upload_2023-3-11_9-12-25.png
 
Sprout said:
Speaking of institutional failures, not sure how to parse this;
More...

I posted it on schizo's thread "is the crypto winter over"

Most banks are insolvent if forced to realize losses on their long dated securities holdings (i.e. MBS, US Treasuries) and the biggest bank, the Fed is also insolvent

SVB was forced to realize losses m2m due to a run on the bank, due to depositors taking their money out of the banks and buying short term treasuries and earning fat yields, it's a reflexive loop

Could happen to all the banks and why not?

Why have a million $ parked at the bank and risk losing the $750k in a bail-in situation or SVB-like collapse, when all you have to do is withdraw from the bank and buy US 3 mo, 6 mo, 1yr treasuries, get a fat yield risk free?



 
Last edited:
Tokenz said:
It's going back up now. Remember their bank is FDIC insured. So lets all stop and take a breather, because nothing will happen
More...

FDIC insurance is only $250K, so they lost $3.3 B, but so did many many silicon valley startups and companies, unless there's a bailout, Bill Ackman already begging for one
 
Tokenz said:
It's going back up now. Remember their bank is FDIC insured. So lets all stop and take a breather, because nothing will happen
More...

FDIC insurance means nothing in SVB's case, because unlike the big retail banks, the vast majority of SVB's deposits were from institutions with well over $250K FDIC deposit insurance limit. And institutions tend to act much faster to withdraw their cash than retail depositors.
 
Bill Ackman already begging for one-
More...

I can only assume it's because he missed the short. Had he shorted, he'd be all over CNBC again dictating how:

Hell is coming!


Unless... 'Hell is coming' gets interpreted as... holy shit - it's the end of the world, time for the tax-payer to fund a bail-out yet again!
 
You must log in or register to reply here.
Back
Top