New York Grants Approval for Paxos Stablecoin Expansion, Advocates Regulated Approach Instead of Tether and Circle
Paxos Secures Regulatory Approval to Expand Stablecoin Operations on Solana Blockchain
Paxos, a prominent player in the stablecoin market, has received official clearance from the New York Department of Financial Services (DFS) to extend its stablecoin offerings to the Solana blockchain. This move positions Paxos as a leader in regulatory compliance, surpassing competitors like Tether and Circle.
This marks the first expansion of Paxos to another blockchain, as the company aims to launch its Solana-based stablecoin on January 17, 2024. By leveraging Solana’s fast transaction speeds and lower fees, Paxos aims to enhance the reliability and security of its USDP stablecoin.
Paxos initially obtained DFS approval in 2018 for its first stablecoin, Paxos Standard, which was later renamed USDP in 2021. Unlike competitors Tether and Circle’s USD Coin, USDP is exclusively issued on the Ethereum blockchain to adhere to DFS regulations.
Paxos’s direct collaboration with the DFS for stablecoin issuance sets it apart from Tether, which has faced criticism for its offshore operations, and Circle, which issues USDC on multiple blockchains, including Tron, a blockchain that has faced scrutiny for illicit finance activities.
Walter Hessert, Head of Strategy at Paxos, expressed the company’s vision, stating, “The expansion of our stablecoin platform to support Solana marks an important step towards making stablecoins ubiquitous for everyday consumers. Paxos has established itself as a leader in oversight, reserve management, and issuance in the stablecoin market. By integrating USDP with Solana, we are making it easier for anyone to acquire and use the safest and most reliable stablecoins.”
Despite its successes, Paxos has faced challenges, particularly with its early stablecoin, BUSD, developed in partnership with Binance. Following allegations that Binance was producing a synthetic version of BUSD without clear reserve backing, the DFS instructed Paxos to halt its issuance. This setback had a significant impact on Paxos, as the partnership with Binance accounted for over 95% of its revenue.
Currently, Paxos’s notable project is PYUSD, a new stablecoin launched in collaboration with PayPal. This partnership may also lead to PayPal exploring opportunities for expansion on the Solana blockchain with its stablecoin. Initially, Paxos plans to introduce USDP on Solana, a stablecoin with a market cap of $370 million, in contrast to USDC’s nearly $25 billion and Tether’s staggering $94 billion.
Tags: Cryptocurrency