Paxos takes aim at Circle and Tether, says 96% of its stablecoin reserves are cash or cash equivalents


In a July 21 blog post, Paxos revealed that its duo of stablecoins, Paxos Standard and Binance USD, are backed by 96% cash or cash equivalents.

This contrasts with recent reports coming out of the other leading U.S. dollar-centric stablecoin operators, Tether and Circle — a comparison that Paxos invited in its post. Indeed, the post itself can be seen as a callout of Paxos competitors in the growing stablecoin ecosystem. USDT and USDC are the most sizeable stablecoins by total supply, according to The Block's Data Dashboard, followed by BUSD.

"USDC and Tether reserves are not comprehensively overseen by any financial regulators," reads the blog, before charting recent announcements that those tokens are backed by 61% and 2.9% cash deposits, respectively.

Source: Paxos Blog

Regarding its "cash equivalents," Paxos elaborates: "All cash equivalents are held in the form of US Treasury Bills with maturities of 3 months or less or overnight repurchase agreements overcollateralized by US Treasury instruments."

Facing new requirements and scrutiny following a settlement with the New York Attorney General, Tether revealed a breakdown of its USDT backing for the first time in May. Subsequently, the stablecoin market has seen a rise in this sort of reporting.

Stablecoin operators in the U.S. are not subject to a standardized federal regulatory regime. These operators are instead regulated within a patchwork of state entities; of these, New York is the most significant. The NYAG has banned Tether from operating in the state. Meanwhile, Circle runs under a Bitlicense and Paxos under a trust charter, both granted by the New York Department of Financial Services. 

Federal regulators are, meanwhile, closely monitoring these firms' efforts at transparency while they work to assemble a strategy across various agencies. These actions appeared to gain considerable speed in the wake of the 2019 unveiling of Libra, now known as Diem, which provoked a strong regulatory response worldwide, more recently manifested in proposals in the European Union and the halls of Congress, among other places. Private stablecoins have also spurred on the work being done at central banks on new types of digital currencies. 

Some predict that a functional ecosystem of private regulated stablecoins would render a U.S. central bank digital currency unnecessary

Trending Stories

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

5 Steps to a Successful Crypto AML Program

As cryptocurrencies become increasingly mainstream, regulators, the media and policymakers are paying more attention to the financial crime risks associated with them. But what are the biggest compliance challenges crypto firms face, and what does a best practice AML program look like? 
Read Full Story
Sponsored Post

Layer-2 Scaling Solutions: A Framework for Comparison - Commissioned by Polygon

Ethereum had a breakout year in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the first time. Its network facilitated upwards of $7 trillion value transfer. Non-fungible tokens (NFTs) emerged as another “killer application” that have put its technology on the global stage and caught the attention of the masses.
Read Full Story
May 5, 2022, 3:17PM UTC

The TRON Ecosystem Thrives Amidst Market Chaos

TRON DAO has announced the launch of a $10 million incentive fund in light of recent events to support Terra developers migrating to the TRON ecosystem, including TRON’s EVM compatible cross-chain solution BitTorrent Chain (BTTC), which helps facilitate the seamless transfer of assets across mainstream public chains, including TRON, Ethereum, and BNB Chain. 
Read Full Story
Sponsored Post