About Binance USD (BUSD).

Binance USD (BUSD) is a stablecoin backed by the US dollar, established by the Binance exchange. Stablecoins, such as BUSD, are digital assets linked to fiat currency—in this instance, the US dollar—offering stability amidst the volatility common in other cryptocurrencies like Bitcoin.

What is Binance USD?

Binance USD (BUSD) stands as a stablecoin backed and secured by U.S. dollars. It grants users the ability to engage in transactions with other digital and blockchain-based assets while minimising exposure to volatile market fluctuations.

BUSD was conceived to enhance the decentralised financial landscape, facilitating a seamless global network that progressively boosts the accessibility, flexibility, and speed of transactions involving digital assets.

These tokens, issued as ERC-20 tokens on the Ethereum blockchain, maintain a 1:1 backing with U.S. dollars held in bank accounts under the ownership of Paxos, Binance's collaborating partner for this initiative. Moreover, BUSD is among the select few stablecoins authorised by U.S. regulators, joining GUSD by Gemini Trust Company and PAX by Paxos.

What are the origins and expansion of Binance USD?

The collaboration between Binance and Paxos for the creation of Binance USD was announced on September 5, 2019. The New York State Department of Financial Services (NYDFS) granted approval for BUSD. From September 12, 2019, BUSD became available for purchase on a 1:1 basis with the USD held by Paxos.

Subsequently, on September 20, 2019, BUSD became tradable on the Binance platform, facilitating exchange with BTC, BNB, or XRP. Monthly audits, conducted by the accounting firm Withum as mandated by the NYDFS, ensure transparency and compliance.

Over the six months following BUSD's launch, Binance expanded its utility both within and outside its ecosystem. The platform now offers 48 different trading pairs with USD, enabling investors to trade the token against top cryptocurrencies and leveraged tokens. Binance also introduced a one-click buying and selling platform supporting eight fiat currencies via bank transfers or credit cards.

What is the technology behind Binance USD?

Binance USD is fully collateralized by USD in bank accounts on a 1:1 basis, administered by Paxos, and audited monthly to comply with New York state regulations.

Requests to purchase or sell BUSD result in corresponding movements of cash into or out of the reserve account, leading to the minting or burning of BUSD tokens, respectively.

Paxos holds the authority to pause BUSD token operations in the event of critical security threats, such as a hack, while ERC-20 smart contracts contribute to the security and elimination of third-party involvement in transactions, leveraging the blockchain network's trusted capabilities.

What are the regulatory compliance and Usage of Binance USD?

Regulated by NYDFS under the Trust Charter, BUSD adheres to New York banking laws. Paxos is equipped to freeze accounts and nullify balances of frozen accounts when necessary, in compliance with regulations.

While this function challenges asset decentralisation, Paxos asserts it's solely in place for regulatory adherence, aiming to prevent illegal activities like terrorist financing and money laundering. Paxos affirms it won't utilise this function unless mandated by law enforcement.

Binance USD functions on the Ethereum blockchain network like any other ERC-20 token, enabling straightforward redemption through Paxos-controlled addresses for burning tokens and transferring fiat currency amounts to users' bank accounts.

Considering BUSD exists on a public blockchain, it serves as an alternative to fiat currencies, allowing outsourcing of banking needs through Paxos. Its compatibility with Ethereum-based dApps and smart contracts further enhances its usability.

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