Binance’s Proof-of-Reserve (PoR) reveals shift in strategy
According to Binance’s Proof-of-Reserve (PoR), the crypto-exchange has sold its USDC stablecoin reserves and purchased approximately 100,000 BTC and 550,000 ETH between March 12 and May 1, 2023. This represents a value of around $3.5 billion in the two major crypto assets.
Key Points:
– Binance changed its strategy and sold its USDC stablecoin reserves.
– The exchange purchased 100,000 BTC and 550,000 ETH during the specified period.
– Analyst Aleksandar Djakovic highlighted Binance’s proof of reserves on Twitter.
– Binance converted USDC deposits into BUSD while keeping USDC as a reserve.
– After the collapse of Signature Bank, Binance sold its USDC reserve for BTC, ETH, and USDT.
Binance’s Bitcoin reserves audited by Mazars
The importance of certified Proof-of-Reserve (PoR) for centralized crypto-exchanges became a topic of discussion after the collapse of FTX in November 2022. Binance audited its Bitcoin reserves the following month, with auditing firm Mazars confirming their full guarantee. Binance CEO Changpeng CZ Zhao reached out to Mazars for the initial audit. However, at that time, Binance couldn’t demonstrate sufficient reserves to cover all crypto assets.
USDC’s performance and market cap decline
After the shutdown of Silicon Valley Bank, Circle’s stablecoin, USD Coin (USDC), experienced a significant drop in volume. USDC holders were concerned after Circle announced that $3.3 billion of USDC reserves were tied to the now-collapsed bank. As a result, USDC’s market cap has halved from $54 billion to $26 billion, while Tether (USDT) has seen market cap growth from $66 billion to $84 billion. Despite the decline, USDC remains the second largest stablecoin by market cap and the sixth largest overall. Circle CEO Jeremy Allaire revealed that 70% of USDC adoption is outside the United States, with strong progress in Asia, Latin America, and Africa.
Hot Take
Binance’s decision to sell its USDC reserves and invest in BTC and ETH showcases a shift in strategy toward major cryptocurrencies. Auditing the reserves and addressing concerns about transparency is crucial for maintaining trust in centralized exchanges. The decline in USDC’s market cap highlights the importance of stablecoin stability and the impact of banking relationships on their performance.
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