Binance USD or abbreviated BUSD is a regulated, US dollar indexed, fiat-backed stablecoin. One USD is held in reserve for each BUSD coin. In other words, the BUSD price is indexed to the USD at a one-to-one ratio.
Binance USD Coin was created by Paxos and Binance. BUSD coin is technically a fiat-backed stablecoin and is indexed to USD. An amount of USD equal to the total supply of BUSD is held at US banks that are insured by the FDIC and serve as Paxos’ reserves. When the price of USD rises or falls, the price of BUSD changes at the same rate.
In fact, this is the most common and traditional model for stablecoins as well. BUSD holders can convert their tokens to fiat money or convert their fiat money to BUSD. The owner of the project, Paxos, publishes monthly audit reports for BUSD reserves.
Source: https://www.investorsobserver.com/news/crypto-update/binance-usd-busd-low-volatility-but-falling-sunday-is-it-time-to-cash-out
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