BUSD is issued not by Binance, but by Paxos that is regulated in the state of New York under BitLicense.
It is one of the toughest licenses to get in the world, so I would be surprised if BUSD somehow collapses.
It is one of the toughest licenses to get in the world, so I would be surprised if BUSD somehow collapses.
https://paxos.com/2022/04/07/busd-issued-by-paxos-on-ethereu...
Tl;Dr: Paxos issues something called BUSD on Ethereum, which is regulated. Binance issues something that's kinda sorta related but not really, that's fully unregulated, only usable in their private chain, ALSO called BUSD, that is just monopoly money. They happen to have the same name, but hey, you fell for it!
Related quote from the link:
"Paxos issues two US dollar-backed stablecoins – Pax Dollar (USDP) and Binance USD (BUSD) – that are overseen by the NYDFS. These two tokens are very similar in design and reserve operations because they are regulated. Paxos and NYDFS agreed to the terms of the token in advance of issuing – this includes the stipulation that USDP and BUSD only be issued by Paxos on the ethereum blockchain at this time.
Our marketing partner for BUSD – Binance – issues a token on its BNB smart chain called Binance-Peg BUSD ... Note that Binance-Peg BUSD is strictly a Binance product; it is not issued by Paxos nor regulated by the NYDFS."
Binance pegged USD is not printed out of thin air. It is a bridged token from Ethereum to other blockchains. Because how smart contracts work, Binance cannot manipulate Binance pegged USD supply unless they seriously break BNB Chain.
You can verify the reserves and bridges here:
https://www.binance.com/en/assets-proof
If you do not believe this web page, you can also run your own node and ask it directly using JSON-RPC API.
Thus any Binance pegged USD (and other bridged tokens) are 1:1 backed by matching token on Ethereum chain. Binance pegged USD is not different from any other bridged token on other bridges and chains and there is no reason to suspect any foul play here.
Because it is transparent and on-chain there cannot be fraud. There could be, however, technical issues and hacks with the bridges.
The reason why Paxos do not directly issue tokens on other chains is that they 1) likely do not have infrastructure for it yet 2) they are limited by commercial agreements or agreements with a regulator.
Yet ? We are talking multiple tens of Billions of $ and supposedly they don't have infrastructure YET ?
I don't know anything about the coin itself, but all of this sure smells like the small print that some will find very relevant when the time comes.
> Yet ? We are talking multiple tens of Billions of $ and supposedly they don't have infrastructure YET ?
These up billions of $$ of customers money which they make a kind of commission on. The commission is not going to be billions but rather millions; and crypto/blockchain infrastructure/developers are very expensive.