Binance USD Stabilizes at $1
- Binance USD (BUSD) has stabilized at its intended $1 peg after Binance CEO Changpeng Zhao clarified the connection to the Paxos Trust Co.-issued token.
- Paxos has already burned over $700 million of BUSD tokens since Monday.
- Changpeng Zhao clarified that Binance does not issue BUSD, but rather has an agreement to let Paxos use their brand.
Background on BUSD
Binance USD (BUSD) is a stablecoin backed by short-term treasuries and cash-like assets. It rallied to $0.9997 in European morning hours on Wednesday, recovering from a two-year low of $0.9950 hit after the New York Department of Financial Services (NYDFS) on Monday ordered Paxos to stop minting more of the tokens.
Impact of Regulatory Pressure
The regulatory pressure could impact BUSD’s market cap, which will decrease over time. If BUSD is ruled as a security by the courts, it will significantly impact the development of the crypto industry in jurisdictions where it is ruled as such. Despite this uncertainty, however, Binance will continue to support BUSD for now but foresees users migrating to other stablecoins over time and that product adjustments will be made accordingly.
Funds Are #SAFU!
During a Twitter Spaces session on Tuesday, Zhao clarified that Paxos also assured them that funds are #SAFU, and fully covered by reserves in their banks with their reserves already audited many times by various audit firms.