Binance, the world’s leading cryptocurrency exchange, has introduced its BUSD monthly reserves holding reports. This latest development is to provide transparency for the BUSD stablecoin.
The cryptocurrency space has seen a few stablecoins suffer in recent months. The collapse of Terra’s UST stablecoin a few months ago sent a shockwave to the broader cryptocurrency market.
A few days ago, Solana’s Nirvana stablecoin NIRV recorded massive price falls. The NIRV stablecoin has lost its peg against the US Dollar after losing more than 90% of its value following a flash loan attack on the Nirvana protocol.
Binance is taking a step further to ensure that there is absolute transparency in how it operates its stablecoin. In a blog post published on Monday, August 1st, Binance said;
“Not all stablecoins are safe, and there are risks to consider. 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.”
The cryptocurrency exchange said it has partnered with Paxos to offer its customers the most trustworthy and fully regulated reserve-backed stablecoin, BUSD, which comes with the highest standards of security and transparency.
Starting from July 2022, Paxos is taking another step to increase the public’s trust in BUSD and lead the market in transparency, Binance added.
Binance explained that BUSD is fully backed by cash and cash equivalents. As BUSD is regulated by a primary prudential regulator, It is and always will be backed only by cash & cash equivalents. BUSD’s cash-equivalents reserves include (1) US Treasury bills with a maturity of less than 90 days and (2) overnight loans secured only by US Treasury securities.
Furthermore, the reserves backing BUSD are held in fully segregated, bankruptcy-remote accounts. Binance added that since it abides by the New York Banking Law, in the unlikely event that Paxos Trust became insolvent, it would not go through standard bankruptcy procedures like other companies. Instead, the Superintendent of NYDFS would return assets held in custody by Paxos Trust to their rightful owners. Paxos Trust holds customer assets safely separate from any corporate funds as a qualified custodian.
This latest development doesn’t come as a surprise, as positive Binance reviews show why the cryptocurrency exchange continues to lead the way. Data obtained from Coinmarketcap shows that Binance has a daily trading volume of $16 billion while Binance.US processes nearly $400 million daily.