What is BUSD (BUSD)?

Deep Dive

1. Regulatory Framework & Backing

BUSD is issued by Paxos Trust Company, a New York-regulated entity, ensuring compliance with the NYDFS’s rigorous standards. Each token is backed 1:1 by reserves held in FDIC-insured bank accounts or short-term U.S. Treasury bills (maturity <90 days), with monthly audits to verify transparency (Paxos). This structure aims to minimize counterparty risk and maintain price stability.

2. Technical Architecture

Native BUSD exists as an ERC-20 token on Ethereum. To expand utility, Binance offers Binance-Peg BUSD on chains like BNB Chain, Avalanche, and Polygon. These wrapped tokens are backed 1:1 by locked BUSD on Ethereum, though they’re not directly regulated by NYDFS. This design allows cross-chain usability while anchoring value to the original collateral.

3. Ecosystem Role

BUSD serves as a liquidity bridge in crypto markets, enabling low-volatility trading pairs, remittances, and DeFi transactions. Its regulatory clarity made it a preferred stablecoin for institutions before Paxos halted new issuance in 2023. Existing tokens remain redeemable at parity.

Conclusion

BUSD combines regulatory rigor with blockchain flexibility, offering a dollar-pegged tool for secure crypto transactions. While its issuance has ceased, its legacy highlights the demand for transparent, audited stablecoins. How will evolving regulations shape the next generation of asset-backed tokens?