Table of Contents
- Binance Resumes USDC Withdrawals
- Reason For The Pause
- Changpeng Zhao Expects Normalcy
- A Temporary Pause
Cryptocurrency exchange Binance has announced that it is resuming USDC stablecoins after temporarily pausing requests for several hours.
The halt in withdrawals was announced as the world’s largest cryptocurrency exchange faces record stablecoin outflows.
Binance Resumes USDC Withdrawals
Binance’s decision to temporarily halt withdrawals did give some market watchers the jitters. However, after several hours, the exchange announced the resumption of USDC stablecoin withdrawals. The decision to halt withdrawals was taken as the exchange faced a record level of outflows, with Binance reporting at least $5.2 billion worth of stablecoin outflows on Tuesday alone. This was the exchange’s highest-ever outflows recorded, according to on-chain data analytics firm CryptoQuant.
Reason For The Pause
According to Binance CEO Changpeng Zhao, the exchange had to temporarily pause processing USDC withdrawals because of inadequate USDC reserves on the platform. The pause was necessitated because it needed to complete a token swap. Binance holds a significant chunk of its stablecoin holdings, over $11.5 billion, in the Paxos-issued BUSD, a fiat-backed stablecoin founded by Binance and Paxos, according to Nansen data.
The pause was initiated so that the exchange could swap its BUSD holdings with the USDC stablecoin. However, the swaps could be completed only after banks in New York opened for business since the token swaps needed to be routed through a New York bank, hindering Binance’s ability to process USDC withdrawal requests, albeit only temporarily.
Changpeng Zhao Expects Normalcy
Binance CEO Changpeng Zhao took to Twitter to assure users that the pause was only a temporary measure. The CEO tweeted that the situation would normalize as soon as banks opened.
“On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open. These are 1:1 conversions with no margin or leverage involved. We will also try to establish more fluid swap channels in the future. In the meantime, feel free to withdraw any other stablecoin, BUSD, USDT, etc.”
Binance has seen the market cap of its BUSD stablecoin drop from $21.4 billion to $20.2 billion, according to data sourced from Etherscan. The current market cap is down to $18.8 billion.
A Temporary Pause
Binance’s decision to pause USDC withdrawals was seen as an unexpected move in almost all quarters of the crypto ecosystem, and while markets may have become a little anxious over the move, Binance insisted all was normal. At the time, Binance had stated that the withdrawals were halted due to “technical difficulties.” However, it later emerged that Binance needed to complete token swaps from BUSD to USDC.
CEO ZHAO tweeted that he believes Binance is receiving quite a bit of FUD, expressing his annoyance. However, he stated that despite all the negativity, Binance continues to grow as an exchange.
“FUD helps us grow, even though they are thoroughly annoying. You can FUD about someone without explicitly mentioning their name, which spreads awareness. It also helps unite their supporters because it forms a common defense alliance. We thank you for all your support over the years. And let’s continue to build together.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.