Binance To Destroy $2 Billion Idle BUSD On The BNB Smart Chain (BSC)
22 Februar 2023 - 11:00PM
NEWSBTC
Binance, the world’s largest cryptocurrency exchange by trading
volume, will “destroy” $2 billion BUSD which idle on the BNB Smart
Chain (BSC), per a tweet on Feb. 22. Burning $2 Billion Of Idle
BUSD On The BSC BUSD is a stablecoin issued by Paxos on Ethereum
under the Binance brand. The stablecoin is pegged to the USD and is
backed by cash and cash reserves held in FDIC-insured banks in the
United States and treasury bills. Related Reading: Matrixport
Executive Thinks BUSD Crackdown Won’t Spread To All Stablecoins
Paxos is also regulated by the New York Department of Financial
Services (NYDFS) and is now the third-largest stablecoin by
circulating supply. As of Feb. 22, BUSD had a circulating
collection of $12.4 billion and continues to play a critical role
in Bitcoin and crypto trading, especially in centralized exchanges.
In crypto, stablecoins are channels through which users can convert
fiat currencies into fungible tokens, enabling smooth trading of
digital assets. Besides BUSD, there is USDT, which is the most
liquid, and USDC. Following this announcement, Binance plans
to destroy $2 billion of Wrapped BUSD on the BSC. Paxos only issues
BUSD on Ethereum, the first smart contracting platform. However,
considering the vast Binance ecosystem, the token can be bridged to
the BSC and other chains, including Tron and Avalanche, where it
exists as wrapped BUSD. It is this derived version of BUSD on
the BSC that Binance will burn. Later today, #Binance will
burn $2bn worth of idle BUSD on BNB Chain. The same amount of BUSD
on the Ethereum network, which was used as collateral, will then be
released. — Binance (@binance) February 22, 2023 In a tweet, the
exchange said all burnt-wrapped BUSD would be redeemed on Ethereum
and released to holders. The State Of BUSD And Previous
Collateral Criticism According to data, most BUSD trading volumes
are derived from centralized exchanges. Cryptocurrency exchanges,
including Binance and KuCoin, listing BUSD have generated over $8.7
billion in trading volumes in the last 24 hours. Trackers show that
CEX trading volumes stood at $8.6 billion, several folds higher
than DEX volumes at around $106 million. Related Reading: Binance’s
BUSD Reserves Steady At $13 Billion, Represents 18% Of All Assets
Early this year, it was reported by Wrapped BUSD wasn’t
always backed by reserves, sometimes between 2020 and 2021,
forcing holders to scramble, exiting the token on the BSC. However,
a Binance representative said the error had been noted and the
problem fixed. They pinned the issue to a “timing mismatch.”
Binance undertook a project to centralize the collateral in a
single, dedicated wallet; this was completed on Jan. 4 so that
users can see the 1:1 backing of PBUSD. Minting of PBUSD now only
takes place after the collateral is added to the dedicated
wallet. Trackers on Feb. 22 show that wrapped BUSD
is pegged with the USD. Feature image from Paxos, Chart from
TradingView.
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