Foremost crypto exchange, Binance has resolved to convert the remaining $1 billion industry recovery fund from $BUSD to native cryptocurrencies, including BTC, BNB and ETH. This development was confirmed in a Monday Twitter post by its CEO, Changpeng Zhao. According to Zhao, the move follows the unfolding developments in the stablecoins and banking industry.
Side notes on the Binance $1 billion recovery fund
Recall that the industry recovery fund was launched by Binance in November. Then, CZ revealed that the fund would assist project enduring liquidity issues following the collapse of FTX. Worthy of note that this initiative received the support of many actors in the industry, including Tron founder, Justin Sun. Ever since, Binance has been harnessing the funds to purchase and invest in distressed projects.
Notably, one of those projects that have benefitted from this Binance initiative is Sakura exchange, a Japanese-registered crypto exchange. It is noteworthy that scores of crypto projects have also benefitted from this fund. However, following the uncertainties that have started to greet the stablecoin and banking space, Binance has chosen to be proactive, thereby converting the remaining funds into native cryptocurrencies. According to CZ, the exchange plans to make the movement on-chain so as to ensure absolute transparency.
Circle calls for full-reserve bank for crypto industry amid regulatory clampdown on banking firms
Worthy of note that the crypto banking sector has, in the past few days, been overwhelmed by numerous regulatory clampdowns. Just a few days ago, the California Department of Financial Protection and Innovation closed down Silicon Valley Bank (SVB) for unknown reasons. This development consequently frustrated the proactive attempt by Circle, a popular issuer of USD to withdraw its remaining $3.3 billion from the bank. Last night, the U.S regulator also closed another crypto banking firm, Signature, alleging risks of a systemic bank failure. Interestingly, Signature bank, just like SVB, functions as one of the crypto banking partners of Circle, Paxos, Binance and other notable crypto firms.
Following these developments, Circle assured its depositors with the SVB and Signature bank of the safety of their funds. Its CEO, Jeremy Allaire, assured depositors that its $3.3 billion USDC reserve at SVB will be fully accessible today. More so, Allaire affirmed that the stablecoin issuer has no USD Coin cash reserves with Signature prior to its closedown.
Occasioned by the closedown of this bank, Circle announced that minting and redemption of stablecoins will now be done through settlements with BNY Mellon. Also, the firm employed Cross River Bank as a new banking partner to handle the automated minting and redemption operations. According to Allaire, Circle remains committed to advocating for full-reserve digital currency banking that detaches internet money from fractional reserve banking risk. The CEO expressed optimism on the potentials of the payment stablecoin act currently pursued by the congress. He believes the act will allow the holding of stablecoin fund with cash at the Fed and short-term T-bills.
Paxos holds $250 million exposure at Signature
Paxos, a leading issuer of stablecoin has also come out to explain its relationship with Signature bank. In its Twitter post, the firm admitted that it had $250 million at the bank prior to its closedown. But, Paxos said it held private insurance that covers the amount not covered by FDIC insurance. It expressed optimism in the assurance given by the regulator that all customer deposits at the bank will be fully available when banks open today.
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