Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ By Cointelegraph
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The death spiral of the ecosystem served as a catalyst to the 2022 bear market — causing losses in the billions, damaging investor sentiment and intensifying the regulatory spotlight over cryptocurrencies. However, the recent depegging of Circle’s (USDC) led Binance CEO Changpeng “CZ” Zhao to believe that traditional banks are a risk to stablecoins that are usually pegged 1:1 with fiat currencies, like the U.S. dollar.
On March 11, Circle disclosed that Silicon Valley Bank (SVB) did not process its $3.3 billion withdrawal request. The crypto market responded to the revelation by selling off USDC holdings, causing the U.S. dollar-backed stablecoin to lose its peg. Given SVB’s direct involvement in destabilizing USDC prices, CZ blamed banks for increasing the risks to stablecoins.
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The death spiral of the ecosystem served as a catalyst to the 2022 bear market — causing losses in the billions, damaging investor sentiment and intensifying the regulatory spotlight over cryptocurrencies. However, the recent depegging of Circle’s (USDC) led Binance CEO Changpeng “CZ” Zhao to believe that traditional banks are a risk to stablecoins that are usually pegged 1:1 with fiat currencies, like the U.S. dollar.
On March 11, Circle disclosed that Silicon Valley Bank (SVB) did not process its $3.3 billion withdrawal request. The crypto market responded to the revelation by selling off USDC holdings, causing the U.S. dollar-backed stablecoin to lose its peg. Given SVB’s direct involvement in destabilizing USDC prices, CZ blamed banks for increasing the risks to stablecoins.
Continue Reading on Coin Telegraph
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