Paxos Publishes Transparency Report for PayPal USD, Affirming Full Asset Backing
Summary:
Stablecoin issuer Paxos has published its first transparency report for the Ethereum-based stablecoin PayPal USD (PYUSD), confirming that the coin is fully backed by assets. The report shows that the total assets held in PYUSD custody meet or exceed the token balance, with a value of $44.4 million as of August 31, 2023. The report also reveals that the majority of PYUSD assets are backed by U.S. Treasury reverse repurchase agreements held by Paxos. This transparency report comes after the recent launch of PYUSD by Paxos and PayPal, with 90% of the stablecoin held in Paxos wallets and 7% distributed among various exchanges.
Stablecoin issuer Paxos has released its inaugural transparency report for PayPal USD (PYUSD), a stablecoin built on the Ethereum blockchain, affirming that the coin's value is fully backed by assets. The report states that the total assets held in PayPal USD custody are equal to or exceed the token balance, with a total of $44.4 million worth of tokens outstanding as of August 31, 2023. The overall notional position value amounted to $44.5 million.
The majority of the assets backing PYUSD are U.S. Treasury reverse repurchase agreements held in custody by Paxos on behalf of PYUSD holders. The report reveals that $43 million, which represents nearly 97% of the total assets in PYUSD custody, are held in Treasury reverse repurchase agreements.
A reverse repurchase agreement is a contractual arrangement between two parties, where one party agrees to sell securities to another party at a specified price with a commitment. Paxos states that their repurchase agreements have an overnight maturity with reputable financial institutions and are overcollateralized with U.S. Treasuries. In the event of a counterparty default, Paxos can liquidate the U.S. Treasury collateral to compensate for any losses. As all trades are overcollateralized, the risk of loss is considered to be insignificant.
Additionally, as of August 31, Paxos held $1,500,146 of fiat currency in insured depository institutions, known as cash deposits. Paxos provides a link to the IntraFi network, which lists the insured depository institutions where funds can be placed. Paxos clarifies that they currently do not have any active private uninsured deposit insurance policies. Although not all deposits are covered by the FDIC or private insurance, Paxos acknowledges that they may still experience losses in the event of a bank insolvency.
This transparency report follows the launch of PYUSD by Paxos and PayPal on August 7. As of late August, 90% of PayPal USD was held in Paxos wallets, while approximately 7% was distributed across exchanges such as Kraken, Gate.io, and Crypto.com.
On September 12, prominent cryptocurrency payment firm BitPay added PYUSD as a payment option on its platform, in addition to other USD-pegged stablecoins like USD Coin (USDC).
Published At
9/13/2023 10:07:04 AM
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