The failure of three major cryptocurrency-backing banks, ilicon Valley Bank (SVB), Silvergate Bank, and Signature Bank, caused the USDC stablecoin to fall as low as $0.87 from its $1 benchmark.
Amid growing concerns around stablecoins, Binance CEO and co-founder, Changpeng (CZ) Zhao, tweeted on March 13 that with “changes to stablecoins and banks,” it will convert the remaining $1 billion funds from its Industry Recovery Initiative into “native cryptocurrencies.”
Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.
— CZ Binance (@cz_binance) March 13, 2023
Given the changes in stablecoins and banks, Binance will convert the remaining $1B Industry Recovery Initiative funds from BUSD to native cryptocurrencies, including #BTC, #BNB, and ETH. Some fund movements will occur on-chain. Transparency.
Native cryptocurrencies cited by CZ included Bitcoin (BTC), Binance Coin (BNB), and Ethereum (ETH). Next, He posted links to the transaction ID hash for BTC and ETC and said that $980 million took 15 seconds to move with a $1.98 transaction fee.
In response to the Binance co-founder’s move, the cryptocurrency community on Twitter had mixed responses. Some praised the decision as “pure gold” and offered the suggestion of using altcoins to peg stablecoins:
This move is pure gold. Crypto power.
– How about diversifying into stables other than pegged to USD?
For now allow major global currencies and maybe integrate with CBDCs to allow seamless integration in the future.
It will help in reaching out to a huge unbanked users.
— Vipul CypherPunk (@vipul19) March 13, 2023
This movement is pure gold. cryptopower.
– How about diversifying into stablecoins that are not pegged to the USD?
For now they allow major world currencies and maybe integrate with CBDC to allow seamless integration in the future. It will help reach a large number of unbanked users.
However, others questioned the move to sell BUSD, which is supposed to be a stablecoin, and convert it into more “volatile” assets.
On March 10, Circle, the firm behind USDC, revealed that it has about $3.3 billion tied up in bankrupt SVB bank, prompting the initial decoupling event. However, on March 13, USDC had recaptured its $1 level, and is currently hovering around $0.99.
Circle is also known to have an undisclosed amount of reserve funds locked up at Silvergate.another crypto-friendly US bank that just went bust.
The instability surrounding the USDC caused a ripple effect on other stablecoins such as DAI, USDD, and FRAX, which also moved away from their $1 position.
Since events began to unfold on March 10, the entire crypto space has been on edge as to what will happen next.. Users in the Twitter community have made claims that “there is no one left to bank crypto companies.”
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