The minter of PayPal USD (PYUSD) Paxos published its first transparency report. This documentation emphasizes how firmly the digital currency is grounded in physical goods.
The study demonstrated that, as of August 31, 2023, PayPal USD assets were equivalent to, or even exceeded, the value of the tokens in use. The projected worth of the underlying assets as a whole was valued at $44.5 million, just barely over the token valuation of $44.4 million.
In-depth analysis of these assets revealed that PYUSD is strongly anchored by U.S. Treasury reverse repurchase agreements.
“Our repurchase agreements are overnight maturity with reputable financial institutions and overcollateralized with the U.S. Treasuries,” Paxos said and added it is able to liquidate the U.S. Treasury collateral to make itself whole in the event of a counterparty default. The danger of loss is not considered to be considerable because all trades have excessive collateral.
These agreements, which are under Paxos’ supervision, largely benefit PYUSD investors. Data from the research showed that these U.S. Treasury agreements account for roughly $43 million, or a significant 97% of the assets supporting PYUSD.
With the promise of a future transaction, an organization agreed to sell securities to another at a predetermined rate under the terms of a reverse repurchase agreement. For these agreements, which have a one-day maturity and substantial support from U.S. Treasuries, Paxos collaborates with reputable financial institutions.
More information showed that Paxos had fiat money in insured banks totaling $1,500,150 by the end of August. These assets are frequently referred to as cash deposits. Paxos sent interested parties to the IntraFi network, which included banks that are insured.
“Paxos currently does not have any active private uninsured deposit insurance policies. Not all deposits are covered by the FDIC or private insurance, and Paxos may still incur losses in the event of a bank insolvency,” the firm stated .
Several weeks have passed since Paxos and PayPal launched PYUSD on August 7. By the end of August, it was said that Paxos wallets held 90% of the PayPal USD, with the remaining 7% being split across exchanges including Kraken, Gate.io, and Crypto.com.
Along with the already supported USD-pegged stablecoins like USD Coin, the major cryptocurrency payment company BitPay added PYUSD as a payment option on its platform on September 12.