PayPal PYUSD stablecoin is 100% backed: Paxos transparency report

Stablecoin issuer Paxos has published the archetypal transparency study for the Ethereum-based stablecoin PayPal USD (PYUSD), stating that the coin is afloat backed by assets.

According to the report, the full assets held successful PayPal USD custody “meet oregon transcend the token balance,” with full tokens outstanding amounting to $44.4 cardinal arsenic of Aug. 31, 2023. The full notional presumption worth amounted to $44.5 million.

The biggest stock of PYUSD assets is backed by the U.S. Treasury reverse repurchase agreements held successful custody by Paxos for the payment of PYUSD holders. According to the data, arsenic overmuch arsenic $43 cardinal — oregon astir 97% of full assets successful PYUSD custody — are held successful Treasury reverse repurchase agreements.

Data from Paxos’ PYUSD transparency report. Source: Paxos

A reverse repurchase statement is simply a contractual statement betwixt 2 parties, wherever 1 enactment agrees to merchantability securities to different enactment astatine a specified terms with a commitment.

“Our repurchase agreements are overnight maturity with reputable fiscal institutions and overcollateralized with the U.S. Treasuries,” Paxos said, adding:

“In the lawsuit of a default by the counterparty, Paxos is capable to liquidate the U.S. Treasury collateral to marque itself whole. As each trades are overcollateralized, the hazard of nonaccomplishment is not deemed to beryllium material.”

As of Aug. 31, Paxos besides held $1,500,146 of fiat currency astatine insured depository institutions, referred to arsenic currency deposits. Paxos provided a nexus to the IntraFi network, oregon a afloat database of insured depository institutions astatine which funds whitethorn beryllium placed.

“Paxos presently does not person immoderate progressive backstage uninsured deposit security policies. Not each deposits are covered by the FDIC oregon backstage insurance, and Paxos whitethorn inactive incur losses successful the lawsuit of a slope insolvency,” the steadfast added.

Related: PayPal’s caller PYUSD stablecoin faces ineligible headwinds and ‘less functionality’

The study comes weeks aft Paxos and PayPal debuted PYUSD connected Aug. 7. By precocious August, 90% of PayPal USD was reportedly held successful wallets of Paxos, portion astir 7% was distributed among exchanges similar Kraken, Gate.io and Crypto.com.

On Sept. 12, the large cryptocurrency outgo steadfast BitPay adopted PYUSD arsenic a outgo enactment connected its platform, successful summation to already supported USD-pegged stablecoins similar USD Coin (USDC).