Paxos Set to Expand Stablecoin Operations to Solana in January 2024 with NYDFS Approval
Paxos, a leading stablecoin issuer, has secured regulatory approval to expand its stablecoin offerings to the Solana (SOL) blockchain. This significant development, set to commence on January 17, 2024, comes after the financial regulator’s directive earlier this year, which required Paxos to cease the minting of Binance’s BUSD tokens due to various compliance concerns.
The New York Department of Financial Services (NYDFS) has given the green light for this expansion, marking a noteworthy milestone in the stablecoin sector.
Paxos Leads in Regulation with NYDFS Trust Charter
Paxos has distinguished itself as a highly regulated issuer of stablecoins, having issued these digital assets on a large scale. The company’s commitment to regulatory compliance was recognized early on when it received the first trust charter for a crypto firm under the digital asset regulatory framework of the New York Department of Financial Services (NYDFS) in 2015. This distinction positions Paxos at the forefront of regulated stablecoin issuance.
NYDFS is unique among U.S. financial regulators for having developed a comprehensive framework specifically for cryptocurrencies. This has made it a magnet for major industry players like Coinbase and Gemini seeking regulatory clarity.
In 2018, Paxos gained NYDFS approval for its first stablecoin, the Paxos Standard (now known as USDP). In contrast to other USD-pegged stablecoins such as Tether and Circle’s USD Coin, Paxos has been exclusively issuing USDP on the Ethereum blockchain, adhering to NYDFS guidelines.
Walter Hessert, Head of Strategy at Paxos, underscores the company’s dedication to regulatory compliance, which has been crucial in building trust with key partners like MercadoLibre, PayPal, and Mastercard. He highlights Paxos’s unique position in the stablecoin market, emphasizing the company’s unparalleled experience in regulated stablecoin issuance.
Solana Chosen by Paxos for Next Phase of Stablecoin Growth
Since its launch in 2020, Solana has been recognized for its ability to enhance transaction speeds and reduce costs, especially when compared to Ethereum. Despite facing challenges, particularly related to its association with Sam Bankman-Fried, Solana’s native token, SOL, has recently experienced a significant upswing in the market.
Walter Hessert of Paxos sees Solana’s efficiency advantages as pivotal for the company’s expansion. He believes Solana’s rapid transaction capabilities and cost-effectiveness make it a compelling choice for Paxos’ partners interested in integrating stablecoins across various applications, including cross-border remittances and commercial transactions.
One of Paxos’s most ambitious projects to date is PYUSD, developed in partnership with PayPal. This initiative has been a highlight of the company’s endeavors throughout 2023. With the growing capabilities and reach of Solana, Hessert anticipates entities like PayPal will be eager to extend their stablecoin operations to this blockchain, leveraging its technological benefits for broader use cases.
Paxos’s USDP Makes Its Debut on Solana Blockchain
Paxos is set to introduce its stablecoin, USDP, onto the Solana blockchain as its initial offering. USDP currently boasts a market cap of around $370 million, standing alongside giants like USDC and Tether, which have market caps of nearly $25 billion and $94 billion, respectively.
The move to expand USDP onto Solana involved a thorough regulatory review process. Paxos had to undergo a detailed assessment encompassing Solana’s blockchain technology, compliance measures, and internal risk management frameworks.
While Paxos has ambitions to expand its stablecoin offerings to other layer-1 and layer-2 blockchains, specific details about these plans remain under wraps for now.
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