The Technological Advances That Make BUSD Different

By Aleksandra Wilson
3 min read September 23, 2021

What is BUSD?

Binance USD is a stablecoin backed up by the US Dollar; it means that there is a US Dollar in reserve for every coin of BUSD. In simple terms, the amount of BUSD is directly proportional to the USD, and they’re pegged at a 1:1 proportion. It is issued by the partnership between Binance and Paxos. It is regulated and approved by the NYDFS (New York State Department of Financial Services). They have an audit report every month that can be checked on their official site. One of its main goals is to merge blockchain tech with the stability of the US dollar. 

If you have ever acquired or exchanged crypto with Binance, it’s possible that you have come across or at least heard of BUSD. It is usually between the pairs most traded being offered on the Binance exchange. In short, it aims to represent the digital version of the US dollar, and it is linked to its value.

How Is It Regulated?

The state regulators of NY have implemented special measures on Binance, Paxos, and how stablecoins, in general operate. While ensuring that the coins are completely backed up, Paxos has to control the issuance and burning of Binance USD tokens. It also has the right, when considered necessary, to remove funds or freeze accounts due to illegal activity. These concepts all adhere to the banking laws of the Trust Charter and New York that apply to stablecoin.

Why Use BUSD?

It is possible to avoid fluctuations in price in the markets of crypto, with the potential to be very volatile. There exists a demand for stable assets also in crypto, mostly when the market turns too volatile. These periods can be easier for the investors when turning the assets into securities or fiat and BUSD offers that opportunity. BUSD has a lot of liquidity, so it is easy to secure profits when someone is looking to exit a position. 

What Are the Differences From Other Stablecoins?

There are few significant reasons why BUSD is different from other stablecoins. It is part of a group of stablecoins that are backed directly by fiat. Another big difference is that Paxos releases an audit on a regular basis, once a month, to show that the reserves in USD match the supply of BUSD. Withum, an accounting company, completes those audits as part of the requirements as a regulated crypto. The last being something that not every project does, so there’s a risk of some stablecoins backed up by fiat not having all the reserves they say they have. 

Regarding that, we can mention a case brought by the NYS Attorney General. The said case indicated that Tether did not have the reserves they claimed to have in contradiction to their previous statements.

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