Paxos Releases Transparency Report on PayPal’s PYUSD Stablecoin
Paxos has recently published a transparency report regarding PayPal’s PYUSD stablecoin, providing valuable insights into its backing and assets. The report, dated August 31, 2023, reveals that the stablecoin is supported by $45.3 million in assets. The majority of these assets are held in US Treasury Reverse Repurchase Agreements (REPO) and cash deposits at insured depository institutions.
Lower Collateral Compared to Leading Stablecoins
However, it is important to note that this amount of collateral is significantly lower than other leading stablecoins in the market. For instance, Tether’s USDT boasts a total net asset value of $81.8 billion, while Circle’s USDC holds over $26.14 billion.
The Composition of PYUSD’s Assets
The assets supporting PYUSD primarily consist of $43.86 million in U.S. Treasury REPO and $1.5 million in cash deposits. It is worth mentioning that these cash deposits exceed the insurance limits set by the Federal Deposit Insurance Corporation (FDIC), providing an additional layer of security.
Importance for PayPal and the Stablecoin Market
The findings from this transparency report hold significance for both PayPal and the wider stablecoin market. The low-risk collateral assets contribute to enhancing the trustworthiness of the stablecoin. Furthermore, with a Weighted Average Maturity (WAM) of just one day, the portfolio demonstrates high liquidity and minimal sensitivity to interest rate fluctuations.
Hot Take: Paxos Provides Clarity on PYUSD’s Asset Backing
Paxos has shed light on the asset backing of PayPal’s PYUSD stablecoin through its transparency report. The report reveals that the stablecoin is supported by a combination of US Treasury REPO and cash deposits. While the collateral amount is lower compared to other leading stablecoins, the low-risk nature of these assets strengthens the trustworthiness of PYUSD. Additionally, the high liquidity and minimal sensitivity to interest rate fluctuations showcased by the portfolio further enhance its appeal. This transparency report not only benefits PayPal but also provides valuable insights for the broader stablecoin market.
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