Stablecoin issuer Paxos has released the first transparency report for its newly launched Paypal USD (PYUSD) stablecoin. The report, although unaudited, affirms the stability and reliability of the assets backing the stablecoin.
According to the report, as of August 31, 2023, over 90% of PYUSD was held in Paxos’ wallet, with approximately 7% scattered across various exchanges such as Kraken, Gate.io, and Crypto.com. This distribution indicates a strong reliance on Paxos for the storage and management of PYUSD.
The report, which can be found here, provides performance metrics for PYUSD in its debut month. The number of outstanding PYUSD tokens amounted to $44.4 million, with a notional position value of about $44.5 million. The asset composition of PYUSD is primarily backed by U.S. Treasury reverse repurchase agreements, which account for 97% of the stablecoin’s value.
A reverse repurchase agreement is a deal between two parties where one party sells securities to the other at a predetermined price but commits to repurchasing them later. In the case of PYUSD, the agreements are overseen by Paxos and backed by U.S. Treasuries, providing reassurance to holders of the stablecoin.
Paxos has stated that their repurchase agreements are overnight maturity with reputable financial institutions and overcollateralized with U.S. Treasuries. In the unlikely event of a default, Paxos will sell off the U.S. treasury assets to cover any outstanding balances. The overcollateralization of the assets minimizes the risk of loss for PYUSD holders.
Aside from the reverse repurchase agreements, Paxos holds about $1.5 million in fiat. However, it is important to note that not all fiat deposits are covered by the Federal Deposit Insurance Corporation (FDIC) or private insurance, which means there could be potential losses in the event of bank insolvency.
PYUSD has seen increasing adoption, with Bitpay recently adding the stablecoin as a payment option. Other exchanges holding PYUSD include Kraken, Gate.io, and Crypto.com. This adoption is seen as a positive development for the stablecoin, as it adds trust and stability to its usage within the crypto space.
The release of the transparency report has been praised within the crypto community. Many believe that it strengthens trust and stability in PYUSD. Crypto Simon, a Twitter user, remarked, “That’s significant news for the crypto space, especially for those who use or are considering using PYUSD. It adds a layer of trust and stability to the stablecoin.”
However, it is worth noting that the adoption of PYUSD has been slower than expected, as Paxos has yet to release about 36.9 million PYUSD tokens.
Sources:
– Paxos’ PYUSD Report: [Link](https://paxos.com/wp-content/uploads/2023/09/PYUSD-Monthly-Stablecoin-Reporting-August-2023.pdf)
– Crypto Simon’s Tweet: [Link](https://twitter.com/TheCryptoSimon/status/1701916948999897435)
❗Follow us on Twitter to get all the latest crypto news as soon as they're out! 🚀
About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
View J-S Tremblay website
