The world’s largest cryptocurrency marketplace is sharing data about the money behind its own US dollar-pegged stablecoin.
In a new announcement, Binance says that it will regularly provide updates about the reserves behind the popular Binance USD (BUSD).
The move comes after several digital assets and their affiliated projects have collapsed this year while causing tens of billions of dollars in losses worldwide.
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Binance says that, unlike other so-called stablecoins, BUSD is not only “100% backed by cash and cash equivalents” but also regulated and approved by the New York State Department of Financial Services (NYDFS).
BUSD was launched in 2019 by Binance and Paxos and is currently the 6th-largest crypto asset with a market cap exceeding $17.8 billion.
According to the announcement,
“If a stablecoin fails to maintain its value relative to the reference asset, the consequences might be devastating for users.
The primary risk of reserve-backed stablecoins is that some of them can be not fully backed by reserves.
This makes reserves transparency fundamental to determining how reliable a particular stablecoin is.”
Paxos provided the first detailed report documenting the breakdown of its BUSD reserves, with a market value of more than $17.6 billion at the end of Q2 2022.
Almost $10.6 billion is held in US treasury bills and nearly $6.3 billion is parked in US Treasury Reverse Repurchase Agreements, with the remaining $738 million allocated to various cash-related deposits.
All told, only 4.1% of BUSD is currently backed by cash.
Binance says Paxos will provide updated reserve totals on a monthly basis. Read More at DAILYHODL
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