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Coinbase suspending USDC:USD conversions over the weekend
- latchkey 4y agoNot just that, but if you did convert to USD earlier today, they won't let you withdraw.
- coffeebeqn 4y agoDo they use SVB for that?
- latchkey 4y agoPretty sure it is just numbers in a mongodb.
- deleted 4y ago[deleted]
- kersplody 4y agoUSDC is managed the Centre consortium, which was founded by Circle and includes Coinbase as a member. Circle held around $3.3 billion in Silicon Valley Bank, leading to a run on USDC which resulted in it trading for as little as $0.95 on some exchanges today (Mar 10, 2023). This represents around 30% of USDC's cash reserves and 7% of its total reserves. The balance of reserves are held in T-Bills, which are liquid and typically can only be traded during market hours. Coinbase itself has around $2B of USDC on hand. Circle's rumored exposure to Silvergate's collapse is also a concern. If more than $7.8B of USDC were to be liquidated over the weekend, USDC would be effectively insolvent. Freezing trades until the market reopens limits this. USDC should rapidly stabilize due to being backed by very liquid hard assets, but it will probably lose significant marketshare to Tether. UPDATE: USDC Liquidity pools on other exchanges are becoming completely drained, pulling down the peg. https://www.reddit.com/r/CryptoCurrency/comments/11oaz39/coinbase_just_suspended_selling_usd_coin_massive https://www.reddit.com/r/CryptoCurrency/comments/11oaz39/coi...
- mtlmtlmtlmtl 4y agoCan't help but revel in the fact that these crypto ponzi schemes are so dependent on the very banks all the cryptobros denounce, as evil holdovers from the past that will be obsoleted by their scam tokens (that no one outside their bubble even knows how to use). It's so ridiculous I just have to kind of admire it. It's like a cathedral of human hypocrisy.
- basch 4y agoHow is a stable coin a Ponzi scheme?
- mtlmtlmtlmtl 4y agoHow is a stablecoin stable? They're stable until you get rugpulled.
- swalsh 4y agoThat was an Algorithmic Stablecoin. USDC is not, it was backed by dollars in banks with a 1:1 backing and 3rd party audited.
- EVa5I7bHFq9mnYK 4y ago"was backed" hehe
- mtlmtlmtlmtl 4y agoMany the mortgage bonds in the 2008 crisis were AAA or AA rated by a "third party". And they were dogshit. Is it audited by the SEC or some "auditing firm"?
- basch 4y agoI’ll repeat. How is a stable coin a Ponzi scheme. A Ponzi scheme pays a dividend or share of fake “revenue.” Stablecoins don’t make money, unless lent out.
- Waterluvian 4y agoThat’s kind of amusing. By using a traditional bank to store their gold standard bullion, they had exposure to centralized banking risk, which was realized, and caused the crypto to get locked in. It’s like some sort of wacky deadlock condition.
- CGamesPlay 4y agoThe crypto people can take a W on this one, though. USDC transfers still work, so there's no cash flow problem... as long as you can buy your tomatoes with USDC, this won't cause you problems.
- Waterluvian 4y agoI’m not selling you these tomatoes. That USDC you’re offering isn’t liquid enough for my liking.
- mtlmtlmtlmtl 4y agoTIL there's a food market on the dark web.
- null0pointer 4y agoPlenty of clearnet businesses accept crypto.
- mtlmtlmtlmtl 4y agoSure, and paying with crypto is always going to be more painful unless you use an exchange, which is just a bank with less regulation(ok maybe not in the US, since banks are barely regulated there anyway). Which again means it will never catch on unless it just becomes a conventional currency. Which, btw is a sociological inevitability anyway(I will die on this hill, try me). Decentralisation never lasts, see countless examples of that with decentralised protocols(including crypto! Which is literally why this thread is here). Is it useful for people in countries with shitty governments? Very much so, it seems to me. Which is great. But that is not an argument for its intrinsic value as opposed to normal currency in a country with a functioning economy and government.
- Grimburger 4y agoTether, the Sauron of stablecoins, has zero exposure to SVB and is holding the peg just fine. Sorry Patio and friends, maybe next time :)
- stephen_g 4y agoOf course they wouldn’t have exposure to a bank in the US. There’s a reason that Tether has to do business with the more dodgy kind of offshore banks… Their exposure to any banks is likely far, far smaller than their claimed cash reserves, so it’s unlikely to be a bank crash that stops the Tether musical chairs…
- csomar 4y agoTether has significant (if not most) of its reserves in US Treasury. I'm pretty sure they are trading in US markets/banks.
- TheAlchemist 4y agoYou do realize that everything Tether says is a lie ? It's all just a huge scam. It's not easily provable with Treasuries, but it was easily provable when they claimed to hold something like the 8th biggest position in US commercial paper - which is not traded anonymously - and no commercial paper trader ever traded with them.
- csomar 4y agoTether has lots of experience in this field. They were "pioneer" and they went through a lot worse: Tons of FUD, the Bitfinex exchange hack, lawsuits, bank runs etc... In short, they are battle and stress tested to the maximum.
- broknbottle 4y agomore like experienced fraudsters. madoff was able to keep his scheme going for far too long i.e. multiple decades
- modeless 4y agoCoinbase recently "unified" USD and USDC on Coinbase Exchange, trying to pretend they are the same thing. Absolutely boneheaded move. I expected it to cause problems for them eventually, but I'm surprised it was so soon...
- deleted 4y ago[deleted]
- dan-robertson 4y agoIf coinbase had kept 7% of their customers’ dollars in an account at SVB, those would be in the same situation though coinbase might have been able to dig into equity to make customers whole.
- dvh 4y agoBoom!
- paulpauper 4y agoSo many people were expecting it would be BUSD that would de-peg, and now it's USDC, which was considered to be among the safest and safest from regulatory pressure. Goes to show how the consensus is often wrong and how hard these things are to predict.
- adhesive_wombat 4y ago> Goes to show how the consensus is often wrong and how hard these things are to predict. Seems like everyone is just making things up. I'm not sure of the split between "I'd like something to be true" and "I'd like someone else to think it's true".
- timcavel 4y ago[dead]
- kart23 4y agoSo USDC is currently trading at $0.93. Which, if you believe in Coinbase, is free money. And if you don't, then its very bad news for the company and possibly worse news for the banks that are keeping the USDC reserves, because they are about to have a massive bank run on monday. https://coinmarketcap.com/currencies/usd-coin/ https://coinmarketcap.com/currencies/usd-coin/
- paulpauper 4y agonow .89 there are no freebies in finance. no one knows what is left. probably less than many think.
- koolba 4y agoCoinbase should be buying that USDC on chain. They can guarantee it's worth $1 to themselves.
- tylersmith 4y agoThey can't if the USD backing the USDC is stuck in SVB.
- koolba 4y agoI mean with their on chain liquidity. They’d have first right to honor the exchange with themselves so unlike someone else trying to redeem it, they have no counter party risk. Each $.80 token the buy on chain could write off a $1 USDC position.
- PeterisP 4y agoWell, not all USD is stuck in SVB, at least according to what they claim. If Coinbase knows that they have the reserves to back USDC, or 93% of the reserves to back USDC, then them buying back any USDC on the open market at 90% or less is huge amounts of certain profit, while everyone else has to gamble on what the Coinbase actual capabilities are and in many cases are willing to accept a haircut to gain certainty.
- paulpauper 4y agoBTC crashed, stable coins crashing . Financialization means new, unforeseen risks are constantly showing themselves due to the intricacy of the interconnected system. Failure of stable coins will probably lead to sub 10k $btc for sure. Already BTC crashing now on this news after an attempt to rally. FTX was just $20 billion, stable coins combined are $150 billion....
- seydor 4y agoBTC is at $20000 ... at the current rate of the dollar anyways
- wesapien 4y agoCircle/USDC fooked around Paxos/BUSD and now they are finding out. All the xenophobia towards Binance showed who the real ones are. CZ is Canadian too and grew up there.
- marcopicentini 4y agoHow to know if Coinbase invested in long term bonds last year? In the balance sheet a cannot find the unrealized loss
- pavlov 4y agoCrypto was supposed to liberate you from the traditional banksters. Instead it’s an impenetrable smokescreen where you’ve got uninsured credit risk with institutions in Silicon Valley and the Bahamas and who knows where, and you won’t know until the edifice cracks and your money is stuck. Not a terrific improvement. Of course the Bitcoin maximalists will shake their heads, mutter about self-custody, and then go on conducting their actual finances in dirty fiat because Bitcoin is nearly impossible to use for anything that people actually want to do.
- blululu 4y agoDon’t have any horses in this race, but this feels like a straw man. Getting told to go die by a centralized exchange is exactly the kind of problem that crypto solves. The trouble is a ton of web3 startups (like coinbase) worked to undo this feature to improve usability. Pretty much every crypto person I know who has been in it for more than 5 years will insist no keys no coins. A lot of the innovation in web3 consisted of pulling back the decentralization inherent in a lot of blockchains.
- jeroenhd 4y agoI think the "no keys, no coins" crowd definitely has the right idea, but the existence of cryptocurrency exchanges is a sign that for many people decentralisation isn't usable enough just yet. These exchanges hold billions exactly because using these currencies just like real money isn't practical enough, or isn't the intended target of the people trading in them. I think cryptocurrencies suffer from the fact most people seem to use them purely for speculation. I can't remember the last time I've paid by cash but I've never seen any store accept USDC or Dogecoin or anything else. Some online stores used to take cryptocurrencies but they've all stopped as far as I can tell. Mayne this isn't true in other countries. I can imagine people in Argentina or Turkey or Venezuela using cryptocurrencies because their official currency is even less stable than your average cryptocoin and because foreign currencies often become available in limited numbers when banks struggle to contain their slipping currencies, basically sidestepping the government or the banking system. I haven't seen any evidence for it, though.
- EVa5I7bHFq9mnYK 4y agoHaha, after a decade of FUD, turns out USDT were more cautious and diligent with their funds, than the "regulated and transparent" USDC. Still risky, of course. No substitute to holding proper BTC.
- sneak 4y ago> turns out USDT were more cautious and diligent with their funds This refers to facts not in evidence. The potential collapse of USDC is not a reflection on the Tether fraud in any way. Outcomes in one are not evidence for or against anything in the other and it is a mistake to conflate them.
- edem 4y agoNote that this is not because of mismanagement at Circle. This is because these banks bought 10yr bonds and MBSes and now that there is a bank run they have to take huge losses if they have to liquidate. Circle in fact managed this really well IMHO with 75% backing in 36 day t-bills that can be liquidated fast.
- NelsonMinar 4y agoWhat funds? There's no way to know what funds USDT is backed with.
- wesapien 4y agoCircle/USDC apparently was the one that told SEC to go after Paxos/BUSD. USDC depegs and then Coinbase halts USDC/USD trapping people to either sell for a loss or wait for a miracle everything works out. The irony of it all.
- vishal0123 4y agoSeriously, just a tweet? Not even press release, let alone Q and A for breaking one of the core promises of the company. While I still think the deposits are safe, Coinbase should outline their worst case plan on this.
- lxgr 4y agoI wonder how banks being closed is impacting Coinbase's willingness/ability to redeem USDC for USD. Since Coinbase can (at least in the US, to my knowledge) also not transfer any USD out on the weekend, shouldn't it be risk-free to take on any USD liability over the weekend, at least when considering USDC itself risk-free?
- elAhmo 4y agoSo, another “stablecoin” showing up to be not stable? How many of them need to fail before it is clear this is not a viable mechanism?
- edem 4y agoJust because you can't trade it 1:1 doesn't mean it is not stable. The only question is whether you'd still be able to redeem it 1:1 for USD in the future or not. This has happened before with Tether and they were able to service a huge bank run not so long ago.
- jeroenhd 4y agoI'd call it stable as long as everybody who wants to trade their cryptocoins for real money can still get their dollars out. If that's the case, you can sell the cryptocoins online for less money if you want, but that'd be a bad sale because you're essentially giving up 10% of the value for no. Good reason (at the time of writing, value will fluctuate). If this panic turns out to be nothing and the value will recover, some people panic trading right now are going to be at a loss. If trading in tokens for dollars doesn't come back spoon, the value may drop more and the panic sellers may be the ones that made the right choice by selling early. The stability now hinges on whether or not cryptocurrency can be turned into real currency. At the moment, conversions are dropped, so it makes sense that the value has dropped. I don't believe for a second that this has to do anything with "banks closed during the weekend", I'm assuming the people behind the platform are now trying to figure out how to get liquidity with billions tied up in a shut down bank for the foreseeable future (or forever if SVB turns out to be insolvent after all). Maybe they can sell shares or trade other kinds of cryptocurrency reserves to make up the difference so exchanging USDC for real money can continue (probably bringing the price back up to a dollar immediately), maybe they can't and they're doomed. If you have faith in the stablecoin, this may be the right moment to basically buy dollars for a 10% discount. If you don't and you have some money tied up in crypto exchanges, this is the moment to consider getting your money out before the impact of the depeg spreads. If they can get enough real dollars to fulfil the demand, this may just prove that this is a viable mechanism, showing how stablecoins can survive with a significant amount of their real money inaccessible. It ain't over till the fat lady sings!
- Claudeppl90 4y agoStartup A had 10M in SVB. Startup B had 10M in USDC. Startup A is probably closing down, let's hope not and wait until Monday for a bailout. Startup B cut losses and walked away with ~9.2M, on a weekend. There is something to learn here about counterparty risk and outdated regulations/legislations. SVB from a time when no credit cards existed, USDC from a world where the iPhone had already been invented.
- ttul 4y agoYou can hedge the risk of your own bank failing by purchasing put options on its stock, assuming it trades publicly and has an active options market. I don’t know anyone who has ever done that, but it’s a neat idea.
- bandrami 4y ago"With crypto, transferring funds is fast and easy!"
- aliljet 4y agoThere's something wild here. There could be a run on this instrument and nobody could help. Systemic risk screams out here
- prakhar897 4y agoI think Stablecoins systems are more resilient than traditional banks in bank runs. In Case of a traditional Bank Run (SVB), pulling the money out is the overwhelmingly best thing to do due to game theory logic. This means once a bank run starts, there's no stopping it. But in Stablecoins, the coin "depegs", this gives people a reason to actually buy and support the coin if they think insolvency won't happen.
- VagueMag 4y agoEven if USDC eventually manages to regain the peg, it seems likely this will cause major long term damage to adoption. Who wants to hold a "stablecoin" that can sit at a 7+% discount to par for over a day?
- __turbobrew__ 4y agoIs the only way to make a true stablecoin is to create your own bank to hold the assets of the stablecoin? The problem is a stablecoin holds reserves in a bank which the bank is then investing in non liquid assets which puts you in the current predicament. On paper USDC had these cash reserves, but in reality if you follow the trail all the way down you find out that those cash reserves are actually MBS’s and 10 year bonds. A stablecoin which operated it’s own bank could guarantee that all reserves are actually being held in cash ready to wire transfer at a moments notice.