According to a report published by Paxos, PayPal's stablecoin issuing partner, as of August 31, the total assets in the PayPal account "meet or exceed the token balance."
According to the document, there were PYUSD worth $44.4 million in circulation on that date. Paxos accounts held assets valued at $44.5 million at face value for the benefit of PayPal's stablecoin holders.
97% of the reserves ($43 million) came from overnight reverse repurchase agreements on US government bonds. The counterparties to the transactions are "reputable financial institutions." The remainder is deposited with FDIC-insured institutions.
The document states:
"In the event of a default by the counterparty, Paxos is able to liquidate the US Treasury collateral to make itself whole. As all trades are overcollateralized, the risk of loss is not deemed to be material."
The company has warned it could suffer some financial losses in the event of a partner bank's insolvency, as the insurance does not cover the full amount of deposits.
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