• The second largest stablecoin USD Coin (USDC) depegged from its $1 parity owing to the shutdown of the US banking giant Silicon Valley Bank.
• The U.S. government’s coordinated plan to asphyxiate the digital asset ecosystem continues apace, leading exchanges such as Binance and Coinbase have temporarily suspended USDC conversions.
• This ongoing USDC turmoil alarms investors about the hidden threats that might follow and according to CoinMarketCap, at the time of writing, USDC traded at $0.9139.
USDC Depegging From Its $1 Parity
The second largest stablecoin USD Coin (USDC) has depegged from its $1 parity owing to the shutdown of the US banking giant Silicon Valley Bank on Friday. The failure of this largest bank is registered as the worst banking crash since the 2008 financial crisis. The custom of crypto firms depositing their asset reserves in regulated banking systems is entitled to hidden threats which was evidently proven via recent bank-related crypto crashes where several crypto firms were exposed to preceding Silvergate collapse and tagged with corresponding losses. Markedly, Silicon Valley Bank’s failure has trapped Circle and its stablecoin USDC in a terrible torpedo. A lawyer cum crypto-enthusiast MetaLawMan scrutinized US regulators for being the collapse’s initiator in shadow and pointed out Signature Bank as next target.
Deja Vu To USTC Crash?
This ongoing USDC turmoil alarms investors about hidden threats that might follow after depegging slows down relief would be generated amid crypto space but both cases share zero to minimal similarities while it’s pegged to centralized dollar (USD), whereas Terra’s algo-stablecoin USTC was pegged to its sister token LUNC according to CoinMarketCap at time of writing, USDC traded at $0.9139 & hit all-time low of $0.8774 & other stablecoins such as Binance USD (BUSD), Dai (DAI), and USDD have sunk below $1 due to depegging of USDC, leading exchanges such as Binance & Coinbase have temporarily suspended conversions creating domino effect in market cap crashing down over 14% in last 24 hours also Tether (USDT) hovers & clings onto its 1 peg signalling no threat yet!
U.S Government Asphyxiating Digital Asset Ecosystem?
The U.S government’s coordinated plan is said by MetaLawMan on Twitter may be responsible for this chaos trying asphyxiate digital asset ecosystem continuing apace with SilverGate Bank & SVB failure trapping Circle & its stablecoin Usdc with many major players in crypto like exchanges, miners, hedge funds etc shifting liquidity over signature bank being targeted by U.S govt next if proved correct could cause further ripples across industry due lack regulation making process uncertain for participants causing more harm than good sparking fears among investors about what else can come up ahead!
Precautionary Remedies Taken By Exchanges
As precautionary remedy few exchanges such as Binance & Coinbase are taking preventive steps suspending Usdc conversion until situation normalizes restoring trust among users although suspension period not declared yet it’s expected won’t take long before going live again ensuring safety measures taken so far help stabilize market soon enough!
Crypto winter has already taken toll on entire sector with banks failing one after another scaring off investors who fear hidden risks associated involving deposits made into them thus hindering growth prospects even more however still some light seen end tunnel when us govt overseeing situation trying regulate things better with exchanges taking proactive measures survive through this economic downturn soon enough!