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Summary
Binance USD ERC-20
Overall Grade
A
IMPORTANT INFORMATION: BUSD is issued on Ethereum by Paxos and regulated by the NYDFS. Paxos has been instructed by the NYDFS to cease issuing BUSD. All holders will be able to redeem BUSD for US Dollars at a 1:1 exchange rate through at least Feb. 2024. We also caution users considering using Binance-Peg BUSD, a wrapped version of BUSD issued on networks other than Ethereum. Binance-Peg BUSD is a Binance product and neither issued by Paxos nor regulated by the NYDFS. Our analysis pertains to BUSD by Paxos only.
BUSD has been one of the safest stablecoins to hold for the general public. Paxos, the issuer of BUSD, is regulated as a stablecoin issuer by the NYDFS, and therefore subject to stringent guidelines and monitoring requirements.
BUSD’s reserves comprise short dated US Treasuries, highly liquid assets backed by US Treasuries and cash in fully segregated and bankruptcy-remote accounts
Effective February 2023, Paxos has stopped issuing BUSD pursuant to an order by the NYDFS. This is believed to be prompted by the regulator’s concerns about Paxos’ management of its relationship with Binance, its co-branding partner for BUSD.
Based on information available, there is no reason to be concerned about the backing of BUSD. All KYC’d holders may redeem BUSD for USD or swap BUSD for USDP directly through Paxos or trade BUSD for other stablecoins on centralized exchanges.
Binance USD ERC-20
Stability
Stable
Stable
The Stability factor is evaluated on the following:
1. Reserves Management - Quality, quantity, storage and segregation of reserve assets
2. Market Feedback - Indicators of market's confidence in a stablecoin derived from price and trade data
3. Mechanism - Stabilization methods that protect the stablecoin
Binance USD ERC-20
Management
Very Low Risk
Very Low Risk
The Management factor is evaluated on the following:
1. Restrictions - What deterrents exist to prevent key personnel of stablecoin projects from unethical and illegal behavior?
2. Negative Track Record - Have key personnel been involved in scams, frauds or other illegal activities?
Binance USD ERC-20
Implementation
Not Assessed
Not Assessed
This factor aims to assess risks arising from technical implementations – i.e, smart contract code and oracles. It is currently not assessed, but we plan for it to be evaluated in the future.
Binance USD ERC-20
Decentralization
High Risk
High Risk
The Decentralization factor is evaluated on the following:
1. Platform Censorship Risk
2. Custodian Risk
3. Type of Collateral
4. Diversified Voting Power
5. User Censorship Risk
Binance USD ERC-20
Governance
Very Low Risk
Very Low Risk
The Governance factor for fiat-backed stablecoins is evaluated on the following:
1. Holder Protection - What rules, statutes or code exist to protect interests of stablecoin holders?
2. Reserves Verification - What checks are done to ensure existence of reserves?
3. Redemptions - Do issuers have transparent and reasonable redemption terms?
Binance USD ERC-20
Externals
Not Assessed
Not Assessed
This factor seeks to incorporate external feedback mechanisms such as market and social sentiment into our internal ratings. It is currently not assessed, but we plan for it to be evaluated in the future.