Binance and Paxos Go for BUSD With New Stablecoin - Bitsonline

Binance and Paxos Go for BUSD With New Stablecoin

Binance announced today it has received approval for a new stablecoin, called “Binance USD” (BUSD) from the New York State Department of Financial Services. Though the new coin bears its name, BUSD will be issued in partnership with New York’s Paxos Trust Company.

Also read: New York Pursues Tether Case – What’s It All About?

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Paxos Binance BUSD

Paxos will begin issuing and trading BUSD on a 1:1 basis with U.S. dollars on its exchange later this month, as will Binance. Binance will trade BUSD against BTC, BNB and XRP.

Binance CFO Wei Zhou and Paxos CEO Rich Teo will appear on stage at the Invest: Asia 2019 event on September 12th to elaborate on the nature of the partnership.

Paxos, the renamed incarnation of early crypto exchange itBit, calls itself “the first regulated trust company with blockchain expertise” offering “institutional-grade products”. Originally headquartered in Singapore, itBit moved officially to New York City in July 2014. itBit still operates as “itBit by Paxos”.

Binance issues BUSD

BUSD Promises More Coin Stability

Binance is hoping BUSD’s New York regulatory endorsement will create investor trust and thus more widespread use.

Stablecoins are digital assets whose value is pegged to an existing fiat currency, most typically USD. The first and most popular stablecoin is Tether (USDT), issued by Bitfinex and partner iFinex.

Given their far lower price volatility than non-pegged crypto assets, they provide a “parking place” for asset value if market conditions are unfavorable to crypto holders. They have the added advantage of being easier (and cheaper) to move between users and exchanges than fiat currencies, which are subject to banking laws and fees.

There have been several allegations over the years that issuing USDT at strategic moments has prompted sudden rises in BTC prices and that of other crypto assets. Additionally, Bitfinex/iFinex has been reluctant to undergo strict audits of its actual USD and other reserves, raising questions over exactly what “backs” USDT value.

The Race to Un-Tether Stablecoins

Binance already has its own crypto asset, called “Binance Coin” (BNB). However its value fluctuates like any other non-stablecoin asset, and is occasionally accepted by merchants as payment.

Paxos also issues its own USD-equivalent digital asset, called “Paxos Standard” (PAX), which trades on Binance.

Issuing a stablecoin offers exchanges added incentive to trade on their platforms, as well as a degree of prestige. All are vying to unseat Tether, usually with promises of more regulatory scrutiny and accountability.

Winklevoss-owned Gemini offers the “Gemini dollar” (GUSD) which it claimed was the “first regulated stablecoin” and Huobi has HUSD. Other existing stablecoins include Circle’s USDC and Trust Token’s “True USD” (TUSD).

What’s your view of stablecoins, and which exchange offers the most viable alternative to Tether? Share this article on social media and discuss.

Images via Binance, Paxos, Pixabay

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