The past week has been a rollercoaster for the banking industry with the collapse of crypto-friendly banks Silicon Valley Bank (SVB) and Silvergate Bank and the recent closure of Signature Bank, which was ordered to shut down operations to control further panic.
The bank’s failures caused stablecoins, such as Circle USD (USDC), to depeg from its $1 benchmark on Friday to as low as $0.8 per token. The instability of the crypto assets sent shock waves to other stablecoins, including MakerDAO’s DAI, USDD coin, and FRAX, which are collateralized by USDC.
Binance Converts $1 Billion Industry Fund to Native Crypto
In the face of turmoil and rising concerns regarding the fate of stablecoins backed by reserve assets such as the U.S. dollar, Binance has taken a precautionary measure to safeguard the industry recovery funds launched last November after the collapse of Terra (LUNA) and FTX.
The recovery initiative was designed to help companies suffering from liquidity crises due to the FTX implosion.
In a Twitter post on Monday, Binance CEO Changpeng Zhao (CZ) said that the exchange had converted the remaining $1 billion in industry recovery funds which were initially purchased in BUSD to native cryptos such as Bitcoin (BTC) Binance Coin (BNB) and Ethereum (ETH).
CZ Pays $1.29 in Gas Fees
CZ also shared a link to the transaction hash ID showing that $980 million has been converted to the aforementioned crypto assets. The Binance boss also paid less than $2 in gas fees for the transaction, executed within 15 minutes before the banking hour on Monday morning.
Unlike the traditional banking system, which only operates within a stipulated time, the blockchain technology has no such timeline as it works around the clock.
Users can trust the public ledger to process transaction requests across borders anytime.
In response to the news, BTC’s price surged to $22,600 from a low of nearly $19,000, showing a 6% increase since Silvergate’s liquidation last week. Ethereum, on the other hand, soared 8% while BNB recorded a 10% increase, according to CoinMarketCap data.
