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What is BUSD and why does it affect withdrawals of an unrelated token?
by nailer 4y ago
What is BUSD and why does it affect withdrawals of an unrelated token?
- gizzlon 4y agoGuess it's Binance' stable coin. It does seems a little strange, do they convert all their assets to their own stable coin? :O https://coinmarketcap.com/currencies/binance-usd/ https://coinmarketcap.com/currencies/binance-usd/
- joyfylbanana 4y agoYes they do, they announced it a while back. It is certainly interesting way to handle customer assets.
- vineyardmike 4y agoIn some horribly twisted way, it might make sense? If BUSD is a “safe” stable coin backed by real, liquid, currency in a binance bank account (lots of IFs), it might make more sense as accounting than storing it as USDC stored in another company’s bank account, in that other company’s country. If that company makes bad decisions, it could impact binances customers. Especially after FTX and prior stablecoin fiascos, storing customers funds in your own bank seems prudent. If binance can soft-real-time mint USDC during bank hours, then any conversion can be done by a regular-banking wire transfer. All they need is some pre-minted reserves for off-hours. Orrrrrrr they’re playing games with customers funds and hiding it in their own coffers. In which case BUSD is backed by a lie. FTX is familiar.
- jacquesm 4y ago> hiding it in their own coffers Or they have spent it or given it out in bad loans.
- vineyardmike 4y agoYea that’s what I meant. Doing their own shady thing.
- joyfylbanana 4y agoDepends on how they communicate with the user. If their terms say that they are allowed to convert other USD-pegged tokens to BUSD, fine.
- c0m 4y agoThey automatically convert most stablecoins (though very notably not Tether) into BUSD upon depositing. Then if you withdraw some USDP/TUSD/USDC/maybe some others I'm not remembering, they'll subtract it from your BUSD balance. FTX did something similar, though they just auto-converted them to and from fiat USD (again, notably, not applying this policy to Tether).
- Tenoke 4y ago~ Same thing as USDC but issued by Binance. They use them interchangeably in some cases since they themselves can also convert them 1:1 (both are worth 1$) just not immediately- e.g. if you have 100 busd you can straight cash that out as usdc and that might temporarily make it so they have less usdc than needed. People post when Binance have generic delays to withdraws for years in other forums and it's a non-story. I imagine it only made it on the front page because people think it means more than it does.
- joyfylbanana 4y agoI think what is interesting here is that they clearly don't have 1:1 USDC reserves. And as their compliance has been questioned by many in the past might be that they might not be able to convert large amounts of BUSD to USDC, not at least cheaply.
- madsbuch 4y agoThey do, Both USDC and BUSD are backed by actual dollars. Ie. 1. Burn 1 BUSD 2. Withdraw that 1 dollar 3. Deposit it with the USDC account 4. Mint one USDC However, that requires that banks are open.
- joyfylbanana 4y agoProbably not dollars, but some kind of low-risk assets like USD bonds? In that case you also can't just withdraw dollars, you have to sell the bonds - if they have to convert large amount like hundreds of millions, the spread on those bonds might get larger. Also even though it were just dollars in a regular bank account, when the amounts go large enough, the bank might have liquidity issues of their own. What would be the biggest issue is the compliance. As rumours are circulating that Binance might be getting some kind of charges, the banks and other institutions might just stop doing business with them because that would increase their risk a lot.
- vgatherps 4y ago
- mgaunard 4y agoBUSD is another stable coin pegged to USD, like USDT and USDC. What they're saying is that you can't withdraw USDC, but you can withdraw any of the other two.
- xg15 4y agoThe other two, which conveniently both have ties back to Binance. It feels a bit like saying "Unfortunately, converting Facebook Dollars to Apple Dollars is currently not possible due to minor technical difficulties. However, you can still easily convert to Oculus Dollars or Instagram Dollars..."
- AdamN 4y agoWhat's so weird about these stable coins is that there's no money to be made with them (for the end user). They're 'stable' so have no upside but they're non-redeemable when things aren't working and have a real probability of going straight to zero at any given moment. I'd get it for some volatile coin where the risk is potentially worth it but holding these for more than a few days for clearing (?) doesn't make sense to me.
- jacquesm 4y agoIf you follow the money it makes perfect sense. After all, after converting to your 'internal stable coin' you can claim you have the reserves and you're free to spend the original coins in the real world. Right up to the moment that everybody wants their money back and it turns out that your stable coin was worthless.
- charcircuit 4y agoWhy do people hold cash instead of having all of their money invested? Stablility is a feature. People want a stable store of value that is on chain.
- antupis 4y agoProblem lies here that dodgy institutions without goverment supervision are issuing stable coins so you never know when some crypto guy is going to do rug pull. But first government backed stable coin which you can buy and sell fast will be huge.