Paxos, the company behind the PAX stablecoin, has obtained a license from the New York State Department of Financial Services in order to offer a gold-backed virtual currency, the first such virtual currency authorized by DFS, as well as BUSD, a virtual currency pegged to the U.S. dollar.
In 2015, the firm was granted a charter from the NYDFS so it could offer regulated services in the cryptoasset space through its cryptocurrency exchange itBiit Exchange. The license allowed the operator to offer services for buying, selling, sending, receiving, and storing virtual currency.
The New York regulator also authorized Paxos to offer its first asset-backed token in September 2018. The stablecoin, which is pegged to U.S. dollars, is known as Paxos Standard (PAX).
This week’s authorization refers to PAX Gold, an asset-backed token that is pegged to gold. The regulator established required conditions to ensure that potential risks associated with the issuance and offering of PAX Gold have been adequately addressed, including standards regarding anti-money laundering, anti-fraud, and consumer protection, and cybersecurity measures.
In addition to PAX Gold, Paxos was also authorized to offer BUSD, a stablecoin that is pegged to the U.S. dollar. In total, DFS has approved three asset-backed tokens issued by Paxos: Paxos Standard (PAX), PAX Gold (PAXG), and BUSD.
Superintendent Linda A. Lacewell, of the NYDFS, commented: “DFS is committed to encouraging innovation while providing regulatory oversight to keep New Yorkers and the rapidly evolving financial services market safe and sound. These approvals reflect DFS’ leadership in the virtual currency arena and our priority to protect consumers in every decision we make.
Charles Cascarilla, CEO and Co-Founder at Paxos, said: “At Paxos, we appreciate the DFS and Superintendent Lacewell’s commitment to protecting consumers while also supporting financial innovation in New York. We are grateful for the opportunity to offer PAX Gold, the first tokenized gold product to receive regulatory
approval. By releasing a regulated product that makes it easy to own or trade gold, we’re using blockchain technology to democratize access to a multi-trillion-dollar market and bring gold into the digital future. With BUSD, we will be introducing the stablecoin concept to even more users in new markets. There is growing interest in regulated, asset-backed tokens and we expect to keep powering more for new uses and applications worldwide.”
PAX Gold allows investors and traders to own and trade real gold like Bitcoin and provides the ability to own and redeem London Good Delivery gold bars, while offering free gold storage in the most secure vaults in the world with easy access to the gold market with low minimum investment (0.01 PAXG, roughly $15 at today’s prices) and fractional bar ownership (divisible to 18 decimal places).
Paxos specializes in trading and custody of assets digitally through its stablecoins, Paxos Confirmation Service for commodities, as well as the itBit crypto-asset exchange and related services including escrow, custody and OTC trading. In 2018, the firm raised $65 million from investors including venture capital firms RRE Ventures and Liberty City Ventures to expand its operations, which include providing blockchain-based services to financial institutions, as well as operating cryptocurrency exchange and custodian itBit.