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Coinbase suspending USDC:USD conversions over the weekend

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Re: Coinbase suspending USDC:USD conversions over the weekend

#81

Post by TheAlchemist »

csomar wrote: post #40
stephen_g wrote: post #19

Earlier quoted context omitted.

Of 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…

Tether has significant (if not most) of its reserves in US Treasury. I'm pretty sure they are trading in US markets/banks.

You 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.

Re: Coinbase suspending USDC:USD conversions over the weekend

#82

Post by vasco »

cperciva wrote: post #54
kersplody wrote: post #4

USDC 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 an…

The balance of reserves are held in T-Bills, which are liquid and typically can only be traded during market hours. Ok I'll buy that if you or I wanted to sell treasury bills, but... if a company needs to liquidate $10B of treasury bills over the weekend, can't they just call up the CEO of JPMorgan and say "hey we'll give you 10 basis points over Monday's 9AM rate" and make a deal happen?

They can try, but if JPMorgan CEO is getting such a call it's going to be painful for you and you're going to be in a bad place for negotiating those 10 basis points.

Re: Coinbase suspending USDC:USD conversions over the weekend

#83

Post by Tenoke »

re-thc wrote: post #29
loveparade wrote: post #20

Earlier quoted context omitted.

Or maybe you just don't understand it? The whole point of USDC is to have exposure to USD and the US banking system, which is supposed to be stable compared to other banking systems around the world. Could that maybe be why it's called USDC? Hmm. If the US banking system starts failing, it absolutely should affect USD stable coins backed by exactly this banking system.

Can't you just buy USD directly? How does that help? What does the C part of it do?

You cannot buy USD on chain to directly transact with it and other crypto, no.

Re: Coinbase suspending USDC:USD conversions over the weekend

#84

Post by bombolo »

pclmulqdq wrote: post #50
rippercushions wrote: post #48

Earlier quoted context omitted.

There's something deeply ironic about a flight to safety in the form of Tether , which has famously been described as being "quilted out of red flags". But if you can't redeem it and it's not backed by anything remotely approaching normal assets, I guess you can't have a bank run on it either... until the music stops and the insiders propping it up run out of chairs.

There's something to be said for everyone knowing the risks of doing business with you, and behaving consistently (consistently badly) so that those risks don't change. That's the regime of Tether. Nobody will even be mad when the rug gets pulled. The federal reserve could stand to learn a thing or two, honestly.

USD is backed up by USA army. If a country refuses to accept USD they will have a democracy problem and get attacked.

Re: Coinbase suspending USDC:USD conversions over the weekend

#85

Post by irusensei »

broknbottle wrote: post #52
csomar wrote: post #41

Earlier quoted context omitted.

Tether 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.

more like experienced fraudsters. madoff was able to keep his scheme going for far too long i.e. multiple decades

I wish people would stop making this comparison. Madoff fell the moment someone tipped him.

Re: Coinbase suspending USDC:USD conversions over the weekend

#87

Post by FabHK »

loveparade wrote: post #20
mtlmtlmtlmtl wrote: post #5

Earlier quoted context omitted.

Can'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.

Or maybe you just don't understand it? The whole point of USDC is to have exposure to USD and the US banking system, which is supposed to be stable compared to other banking systems around the world. Could that maybe be why it's called USDC? Hmm. If the US banking system starts failing, it absolutely should affect USD stable coins backed by exactly this banking system.

That's funny.

The USD is entirely unaffected. Some deposits at certain banks are affected for large (mostly professional) holders. Retail investors will be made whole (up to 250k), thanks to this banking regulation thingy you might have heard of.

USDC is meant to mirror the USD (sure, with its concomitant FX and inflation risk), but it is certainly not meant to introduce credit risk vis-à-vis some bank most people hadn't heard of last week.

Re: Coinbase suspending USDC:USD conversions over the weekend

#88

Post by FabHK »

pHollda wrote: post #47
loveparade wrote: post #35

Earlier quoted context omitted.

No, in many countries you cannot buy USD directly. You also cannot store USD in a local bank account. And in various places it's explicitly forbidden to hold USD as savings because it would devalue local currency if everyone started transacting in USD instead. So, the "C" makes USD exposure available to anyone worldwide, assuming you have e.g. an Ethereum wallet.

If anyone doubts that this is just a theory, I can confirm it. I live in third-world countries and use USDC exactly for this.

I have lived and travelled extensively in second and third world countries, and almost never had a problem buying or selling USD. Well, in some places there were indeed capital controls (Argentina, China), but that's rare, and I doubt use of USDC is legal then for the circumvention of regulation (which is basically the only use case of crypto).

Re: Coinbase suspending USDC:USD conversions over the weekend

#89

Post by FabHK »

Scoundreller wrote: post #51
loveparade wrote: post #35

Earlier quoted context omitted.

No, in many countries you cannot buy USD directly. You also cannot store USD in a local bank account. And in various places it's explicitly forbidden to hold USD as savings because it would devalue local currency if everyone started transacting in USD instead. So, the "C" makes USD exposure available to anyone worldwide, assuming you have e.g. an Ethereum wallet.

The big one is that many countries do offer foreign currency accounts, but don’t properly hold reserves for them, so the security is there until it isn’t.

So a bit like stable coins? And do you have a source?

Re: Coinbase suspending USDC:USD conversions over the weekend

#90

Post by carlsborg »

kersplody wrote: post #4

USDC 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 an…

> The balance of reserves are held in T-Bills

Similar to SVB, from what I understand. SVB parked several billion in treasuries when rates were at ~1.6%, when interest rates went up, that portfolio drew down, they exited with a loss, this triggered a run.

So if Circle has 70% of its reserves in T bills, they possibly took a market to market loss too, depending on how they were hedged.

(Disclaimer: i have not seen SVB balance sheet, nor Circles.)

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