About Binance USD (BUSD)
Binance USD (BUSD) is backed by U.S. dollars in a 1:1 ratio. Its goal is to establish an efficient platform for using cryptoassets, enhancing the global financial system. The BUSD creators assert that the stablecoin is fully backed by reserves held in either or both of the following ways: (i) fiat cash placed in distinct omnibus accounts at insured U.S. banks, and/or (ii) U.S. Treasury bills, which might involve repurchase agreements or investments through money-market funds. The issuance and regulation of BUSD are endorsed and monitored by the New York State Department of Financial Services (NYDFS). You can access the monthly audit report for BUSD on its official website.
Who are the founders of ?
Introduced in September 2019, Binance USD (BUSD) is a stablecoin backed by fiat currency, resulting from a collaboration between Binance and Paxos. BUSD gained approval from NYDFS upon its launch. Paxos, a financial institution regulated by New York authorities, is responsible for holding the USD reserves that are used to back the BUSD tokens. This digital financial infrastructure allows BUSD to be fully redeemable for US dollars. Paxos uses technology to tokenize, custody, trade and settle assets. It builds enterprise blockchain solutions for institutions like PayPal, Interactive Brokers, Mastercard, MercadoLibre, Nubank, Bank of America, Credit Suisse and Societe Generale. Paxos is a top-funded fintech company with more than $540 million raised from leading investors including Oak HC/FT, Declaration Partners, Founders Fund, Mithril Capital and PayPal Ventures. Paxos, led by CEO and Co-Founder Charles Cascarilla, comprises professionals from diverse fields such as Wall Street and Silicon Valley.
Binance, on the other hand, is responsible for managing the BUSD token. This includes listing the token on their exchanges and providing customer support.
Paxos places all received fiat funds in a trust and then deposits that money into U.S. bank accounts. They assert that each issued BUSD is backed by $1, ensuring a 1:1 ratio. Independent attestations from an auditor are published by Paxos to confirm that the total BUSD supply is held in insured bank accounts approved by the Federal Deposit Insurance Corp. Some of the money is invested in U.S. government debt. These attestations ensure the funds are in bank accounts and that Paxos can hold money in financial instruments.
BUSD can be acquired or redeemed at a 1 BUSD to 1 USD ratio. When you send your BUSD to Paxos, they will eliminate your tokens and provide you with the equivalent fiat currency. This process maintains the 1:1 reserves to supply ratio. Starting from February 21, Paxos will stop issuing new BUSD tokens as guided by the New York Department of Financial Services (NYDFS). BUSD will remain supported by Paxos and can be redeemed by customers until at least February 2024. Both new and existing Paxos customers can convert their BUSD tokens to US dollars and Pax Dollar (USDP), another regulated US dollar-backed stablecoin issued by Paxos Trust.
Stablecoins like BUSD play a crucial role in transactions, payment settlements, decentralized finance (DeFi), and other areas due to their price stability.
While primarily built on the Ethereum blockchain, BUSD is also available on other blockchains via Binance-Peg BUSD. Binance-Peg BUSD is available on several blockchains such as Ethereum, BNB Chain, Avalanche, Polygon, and TRON and is secured using their respective consensus protocols.