In a Depeg Event, Why Might an Exchange Temporarily Halt Trading on Stablecoin-Settled Derivatives?

An exchange halts trading to prevent further systemic losses and manage the risk exposure to its users and its own capital. When the settlement stablecoin's value is unstable, the exchange cannot reliably calculate margin, P&L, or liquidation prices.

Halting allows the exchange to assess the true extent of the depeg, update its risk parameters, and decide on a course of action, such as transitioning to a different settlement asset or implementing a loss-mitigation plan. It is a necessary pause to maintain market integrity.