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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

#91

Post by xref »

bombolo wrote: post #84
pclmulqdq wrote: post #50

Earlier quoted context omitted.

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.

Unlucky for the UK coffee shop that wouldn’t take my USD this morning I guess? Not quite sure what you’re trying to say, if a country doesn’t want to accept usd…they don’t have to

Re: Coinbase suspending USDC:USD conversions over the weekend

#92

Post by Scoundreller »

FabHK wrote: post #89
Scoundreller wrote: post #51

Earlier quoted context omitted.

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?

https://wap.business-standard.com/article-amp/international/...

https://amp.scmp.com/business/banking-finance/article/300879...

https://enterprise.press/stories/2022/10/09/major-local-bank...

https://www.aljazeera.com/amp/economy/2022/2/3/lebanon-us-do...

> No withdrawals were allowed from accounts denominated in U.S. dollars, unless the owner agreed to convert the funds into pesos.

https://en.m.wikipedia.org/wiki/Corralito

Re: Coinbase suspending USDC:USD conversions over the weekend

#93

Post by xref »

xtracto wrote: post #21
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…

Deploying more capital, steady lads!

I know we’re all Extremely Online here, but if you missed this deep cut it’s what Do Kwon said…as Terra was collapsing

https://twitter.com/stablekwon/status/1523733542492016640?s=...

Re: Coinbase suspending USDC:USD conversions over the weekend

#94

Post by [deleted] »

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?

[deleted]

Re: Coinbase suspending USDC:USD conversions over the weekend

#95

Post by delaaxe »

carlsborg wrote: post #90
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…

Wasn't SVB in 10 year mortgage-backed securities whereas Circle is in 3 month bills?

Re: Coinbase suspending USDC:USD conversions over the weekend

#96

Post by fladrif »

mtlmtlmtlmtl wrote: post #46
beebmam wrote: post #30

Earlier quoted context omitted.

Well, I'm pretty sure all credible banks in the US are all insured (both explicitly with FDIC and implicitly far beyond that) by the US government. That's a pretty big thing

That doesn't make them stable. The 2008 financial crisis was literally caused by big US banks. They then had to be bailed out. This is not a symptom of a stable banking system. It's a symptom of the banks having a disturbing amount of power over the government, which is not a good thing. They were able to conduct what is essentially fraud at a massive scale with impunity because they knew the gov would bail them out…

Well whether or not you think banking / government cooperation is a good thing, the fact of the matter is that even when large catastrophes occur, the system is brought back up on its feet.

You can't say the same for crypto systems, luna / terra being a very recent example.

Re: Coinbase suspending USDC:USD conversions over the weekend

#97

Post by FabHK »

irusensei wrote: post #85
broknbottle wrote: post #52

Earlier quoted context omitted.

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.

I don't know whether you're uninformed or deliberately misleading, but that's entirely wrong. He fell after he confessed his crimes to his kids and they informed the FBI (on 2008-12-10, with his arrest the very next day).

However, people had been informing the SEC with suspicions a decade earlier, as recounted in the book No One Would listen: "Madoff Securities LLC was investigated at least eight times over a 16-year period by the U.S. Securities and Exchange Commission (SEC) and other regulatory authorities."

https://en.wikipedia.org/wiki/No_One_Would_Listen https://en.wikipedia.org/wiki/Madoff_investment_scandal

Re: Coinbase suspending USDC:USD conversions over the weekend

#98

Post by sour-taste »

PeterisP wrote: post #73
tylersmith wrote: post #59

Earlier quoted context omitted.

They can't if the USD backing the USDC is stuck in SVB.

Well, 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.

I think that only holds up while people still have faith in the coin. Once that faith is gone Coinbase can buy as much as they want the coin is worthless.

Re: Coinbase suspending USDC:USD conversions over the weekend

#99

Post by carlsborg »

delaaxe wrote: post #95
carlsborg wrote: post #90

Earlier quoted context omitted.

> 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…

Wasn't SVB in 10 year mortgage-backed securities whereas Circle is in 3 month bills?

Hmm you're right about the Circle balance sheet. It is/was indeed short dated bills not notes. https://6778953.fs1.hubspotusercontent-na1.net/hubfs/6778953...

Although, still room for losses with those numbers ($50B) https://ycharts.com/indicators/3_month_t_bill, and make them more likely to want to hold to maturity.

Re: Coinbase suspending USDC:USD conversions over the weekend

#100

Post by renonce »

silasdavis wrote: post #45
re-thc wrote: post #29

Earlier quoted context omitted.

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

It is also kind of an abstraction over cash and treasury bonds. A more liquid fractionalised cash/bond unit. Though that seems to have been the problem here. The original idea with a 100% collaterilised peg was that the entire reserve would be cash. Somewhere along the way treasury bonds were considered cash equivalent. Which on the face of it seems sort of reasonable but clearly they do have a different risk and liq…

> The original idea with a 100% collaterilised peg was that the entire reserve would be cash.

What is cash? Banknotes? You can't store 500 million pieces of $100 banknotes easily or safely.

Cash usually refers to deposits at accredited financial institutions like banks. Effectively this is an amount of money that the bank owes to Circle. The bank deposits money elsewhere, and the central place where all the money is distributed is the Federal Reserve Bank, the central bank of USA, that can never go bankrupt. OTOH, treasury bond is money that US Treasury owes to Circle, so they are not fundamentally different than cash, and in some cases it's even safer since US Treasury bonds are usually regarded risk-free.

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