CZ Warns Traditional Banks Are a Threat to Stablecoins After USDC Depegging

  1. Depegging of USDC due to $3.3 billion withdrawal request not processed by SVB
  2. Involvement of traditional banks raises risks for stablecoins
  3. Need for increased regulation and oversight in the cryptocurrency market

In recent news, Circle’s USD Coin (USDC) has depegged, leading Binance CEO Changpeng ‘CZ’ Zhao to believe that traditional banks pose a risk to stablecoins that are typically pegged 1:1 with fiat currencies such as the US dollar.

The depegging of USDC came after Circle revealed on March 11 that Silicon Valley Bank (SVB) did not process its $3.3 billion withdrawal request. This news caused the crypto market to react by selling off their USDC holdings, which in turn led to the loss of the stablecoin’s peg. The direct involvement of SVB in destabilizing USDC prices has led CZ to blame traditional banks for increasing the risks of stablecoins.

While stablecoins like USDC are designed to maintain a stable price, their stability is heavily reliant on the backing of fiat currencies or other assets. The involvement of traditional banks in this process has raised concerns about the risks that stablecoins face. CZ’s comments suggest that traditional banks may not be equipped to handle the complexities of the cryptocurrency market and may pose a risk to the stability of stablecoins.

In response to the depegging of USDC, Circle has stated that it is working on a solution to address the issue. The company has also reassured its users that its operations will continue as usual. However, the depegging of USDC highlights the potential risks associated with stablecoins and the need for increased regulation and oversight in the cryptocurrency market.

The depegging of USDC has sent shockwaves through the cryptocurrency market, highlighting the risks that stablecoins face when backed by traditional banks. As the market continues to grapple with these challenges, it remains to be seen how stablecoins and the broader cryptocurrency market will evolve in the coming years.

Read also:

disclaimer read more

Crypto News Land ( , also abbreviated as “CNL”, is an independent media entity — we are not affiliated with any company in the blockchain and cryptocurrency industry. We aim to provide fresh and relevant content that will help build up the crypto space since we believe in its potential to impact the world for the better. All of our news sources are credible and accurate as we know it, although we do not make any warranty as to the validity of their statements as well as their motive behind it. While we make sure to double-check the veracity of information from our sources, we do not make any assurances as to the timeliness and completeness of any information in our website as provided by our sources. Moreover, we disclaim any information on our website as investment or financial advice. We encourage all visitors to do your own research and consult with an expert in the relevant subject before making any investment or trading decision.

José is a crypto enthusiast who trades crypto night and day. He loves to share his trading stories and experiences in all his published articles. José likes to hang out and travel to meet new friends. Enjoys sushi, vodka, and tequila.