Erebor Bank Halts Free Stablecoin Cashout for Some Clients Amid Arbitrage Concerns

Erebor Bank has halted its free stablecoin cashout offer for certain customers after reports emerged that professional trading institutions were exploiting the service for arbitrage. The bank reportedly covered the difference between the stablecoin purchase price and cashout amount. According to The Information, Erebor Bank introduced a policy earlier this year allowing Circle and Tether stablecoins to be converted to dollars at face value without fees. Stablecoins often trade slightly below $1 on public markets due to issuer cashout fees, creating arbitrage opportunities. The Information reported that Wintermute and Galaxy Digital participated in these trades. Erebor Bank reportedly requested some institutions like Wintermute to stop trading before discontinuing the free cashout benefit for most clients except those with large deposits, implementing transaction-based fees and limits instead.