Binance Shifts to ‘Semi-Automated’ Process to Manage Reserves of Tokens It Issues
Reserves for these tokens had previously been mixed with customer funds.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/JFINBXRVMZH2VP5NIEEKTJBBFA.jpg)
(Danny Nelson/CoinDesk)
Binance is moving to a “semi-automated” process for managing the reserves of tokens it issues after years in which reserves were mixed with customer funds and at least one major stablecoin, Binance-peg BUSD, was not always fully backed.
The crypto exchange acknowledged the problems last month with the tokens, also known as B-tokens, and said they had been fixed.
"Per recent media reports, historically, the assets we used to collateralize B-token weren’t always kept in dedicated wallets," a Binance spokesperson told CoinDesk. The spokesperson said that Binance has now established 35 dedicated wallets to hold collateral for B-tokens, and its new process ensures that minting only takes place after collateral is added to the appropriate, dedicated wallet.
"Over the last few weeks, we have been moving the collateralized assets to dedicated wallets, one for each network, to make the 1:1 backing clearly visible," the spokesperson said. “This collateral has always been backing our users’ B-token assets and has always been available for withdrawal at any time. We are now simply showing it on-chain in dedicated wallets where it will remain until it may be required.”
Binance said it had decided to make its new process partially, rather than fully, automated, in order to limit security risks.
Bloomberg initially reported about the move.
UPDATE (Feb. 23 16:23 UTC): Updated to remove Bloomberg from the headline and add direct comments from Coinbase.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.