The failure of crypto-focused banks once again showed the vulnerability of stablecoins, which can lose their peg in unusual financial situations.
According to Nic Carter of Castle Island Ventures, the government's willingness to backstop both banks signifies that it's back in the mode of providing liquidity, rather than tightening, and loose monetary policy has historically proven to be a boon for cryptocurrencies and other speculative asset classes.
DAI, another popular dollar-pegged virtual currency that is partially backed by USDC, traded as low as 90 cents on Saturday. Both Coinbase and Binance temporarily paused USDC-to-dollar conversions.their USDC and DAI for tether, the world's biggest stablecoin with a market value of more than $72 billion.
"These were the two most bitcoin-friendly banks, supporting the lion's share of fiat settlement for bitcoin trades between trading counterparties in the U.S.," wrote Mike Brock in a post on social media app Damus. Brock is the CEO of TBD at Block, a unit which focuses on cryptocurrency and decentralized finance.
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