About Binance USD
What is Binance USD?
Gain peace of mind with Binance USD (BUSD), a stablecoin issued by Paxos and backed by the renowned Binance cryptocurrency exchange. Easily accessible as an ERC-20 token on the Ethereum blockchain, you can trust this secure form of digital currency for your financial transactions.
The BUSD token is pegged to the US dollar, and will remain as close to $1 in value as possible. This stability is achieved by Paxos’ backing of each token with sufficient reserves that can be redeemed for USD currency at any time.
The Binance USD stablecoin has been issued in collaboration with the American crypto firm, Paxos. Back in 2018, Paxos launched its own USDP (Pax Dollar) and now offers companies the ability to launch their own brand of stablecoins—the same offering which Binance employed for its very own BUSD coin. All these digital assets from Paxos are backed by an official regulatory approval provided by the New York State Department of Financial Services (NYDFS).
Binance offers a wrapped version of BUSD called the Binance-Peg BUSD that can be accessed via the BNB Chain, Polygon and Avalanche blockchains. Additionally, users have access to an exchange service provided by Binance with which they are able to trade their tokens for regular “BUSD” coins. Be mindful though, as Paxos does not issue nor is it regulated by NYDFS in regards to these specific “Binary-Peg” tokens.
Binance USD functions similarly to other stablecoins, as it is supported by fiat currency. The issuer of the token (in this case Paxos) keeps sufficient reserves for each BUSD in circulation, meaning that 1 BUSD can be exchanged for 1 US dollar on their platform. This creates a market price on exchanges where one BUSD will almost always equal $1.
Every month, Paxos provides certifications from a third-party auditing company that confirms the sufficient USD held in reserve to back each BUSD token. You can easily access these monthly attestations on the Paxos website.
Here’s a concise description of how BUSD remains close to the $1 mark. When the price is much lower than that, arbitrage traders benefit by purchasing and redeeming it for $1 each at Paxos. Conversely, when trading significantly higher than $1 on an exchange, buyers will purchase BUSD directly from Paxos for its original worth of one dollar then resell those tokens with their gains in mind.
Binance USD is a blockchain-based asset that enables users to make transactions on the Ethereum network, and it can also be exchanged in cryptocurrency exchanges. A key characteristic of Binance USD compared to other digital assets such as Bitcoin or Ethereum is its price stability – it always trades at approximately $1. This makes Binance USD particularly valuable for those who want to perform secure transactions on the blockchain without having to worry about drastic fluctuations in value.
The Binance Visa card provides users the convenience of being able to make purchases and payments with their crypto assets anywhere that accepts Visa cards. Plus, it features support for Binance USD – making your payments even more secure than ever before!
BUSD is a valuable asset, as each token has 1:1 backing from reserves held by Paxos. You can exchange BUSD for USD through the Paxos platform at any time. The company reports that their reserves consist of either one or both of the following options:
- Fiat cash in dedicated omnibus accounts at insured U.S. banks
- U.S. Treasury bills (including through repurchase agreements and/or money-market funds invested in U.S. Treasury bills)
Easily get BUSD on the well-known and trusted cryptocurrency exchange, Binance. They offer a wide array of trading pairs that make buying or swapping your Bitcoin and other cryptocurrencies for it remarkably convenient. On top of this, you can also buy with cash or convert to it from other stablecoins. What’s more, if decentralized exchanges are more your style then simply search Ethereum-built DEXs – there is bound to be plenty of offers waiting!
Despite its close association with the US dollar, BUSD is often overlooked as an investment option. The reason being that it tends to lack price volatility which many investors seek in potential investments. Yet there are special cases such as local currency depreciation due to inflation where holding onto value through BUSD might be seen as a viable investment opportunity.
Stablecoins such as BUSD are not without risk, though. As the issuer could lack funds to back all tokens in circulation or be pressured by regulators and out of business, any given stablecoin can experience a sudden drop in value and liquidity due to counterparty risks associated with it.