Paxos raises the stablecoin transparency reference, including for Binance USD – Ledger Insights
Today, the blockchain company Paxos issued far more detailed disclosures about the assets that support both the Pax dollar (USDP) stablecoin and the Binance USD (BUSD), the third largest stackcoin that Paxos issues.
It divides the assets according to specific government securities it has invested in and shows the average maturity.
“The only way we can build trust in stable currencies and increase the use of this important technology globally is by continuing to embrace robust supervision and provide outstanding transparency,” said Charles Cascarilla, Paxos CEO and co-founder. “These improved revelations underscore this point.”
Shortly after the collapse of Terra’s algorithmic stablecoin last month, the New York State Department of Financial Services (NYDFS), which regulates the Paxos Trust, issued guidelines for stablecoin issuers. This includes requiring the funds to be invested only in bank accounts and short-term government bonds. Paxos has always been more conservative than other stablecoin issuers, investing in cash and government bonds.
Last year, after many questions about the nature of the certificate that supports Tether stablecoin, Circle announced that USDC stablecoin assets would no longer include certificate. And even Tether has gradually reduced the share from half of the assets to a quarter and plans to reduce them further.
Another NYDFS requirement is more timely certificates, which request publication within 30 days. Again, unlike some competitors, Paxos has been at the forefront and published certificates shortly after the end of the month.
In contrast, the largest stable currency, the Tether, reports only quarterly, usually six weeks after the end of the quarter. The latest published report is for the end of March, and the next one will probably not be released until mid-August, despite cryptocurrencies in between.
Although Paxos does not need to change anything to comply with the NYDFS requirements, they have taken it a step further with this detailed revelations published today.
Some may argue that openness is always good. And for the most part, we agree. One thing that Paxos includes in its security report is the list of banks that have deposits. If there was a run at one of these institutions, it could create unnecessary concern for Paxos stablecoins, even if the exposure was negligible. Paxos does not have a huge share of the funds in bank accounts, it spreads them between several institutions, and it has private insurance for a significant share.
