|Headquarters||New York City|
|Key People||Charles Cascarilla, Founder and CEO; Andrew Chang, COO; Richmond Teo, CEO of Asia|
|Products||Paxos Standard, a stablecoin; custody services|
Also see John Lothian News's 2017 video interview with Charles Cascarilla, the founder of Paxos, which is available here.
Products and Services
Paxos Trust Company, the successor to itBit Trust Company, was licensed on September 10, 2018 by the New York State Department of Financial Services (NYDFS) to issue a stablecoin - that is, a virtual currency tied to the value of a fiat currency. The coin is called Paxos Standard (PAX) and is tradable on Paxos's cryptocurrency exchange, itBit, as well as on 75 other cryptocurrency exchanges. In mid May 2019, PAX was the 39th largest cryptocurrency by market capitalization according to CoinMarketCap, an online industry data reporting service.
One PAX should have the value of one U.S. dollar, according to the Paxos website. While Bitfinex, Tether and Tether's USDT were being investigated for criminal fraud by the Attorney General of New York, Paxos announced on May 13, 2019, that PAX could be redeemed instantly on the Paxos platform. Delays in redeeming their coins have been a persistent problem for stablecoin users.
The company suffered headaches in late 2018 over its competitor, Gemini, when some traders took advantage of an arbitrage opportunity between Gemini dollars (GUSD) and Paxos' stable coin, PAX. Traders bought GUSD at a 2 percent discount and exchanged vast sums of it for PAX, and then opened accounts under relatives' names to bypass the $10k transaction limit on Huobi, another exchange. In order to redeem those coins for US dollars, they had to go through the original issuer - Paxos. The result was huge numbers of users wanting to cash out their new PAX coins.
In a March 11, 2019, interview with Fortune's The Ledger, Cascarilla said that Paxos was planning on issuing a stablecoin backed by gold "definitely this year." He noted that Paxos's status as a trust company allowed it access to the banking system which would provide transparency and legal certainty around their holding gold. Cascarilla also told The Ledger that Paxos had applied to the U.S. Securities and Exchange Commission for permission to tokenize securities. He did not provide a launch date for that product.
Huobi stablecoin (HUSD)
In July 2019, a digital asset startup called Stable Universal, which was backed by Huobi, launched a stablecoin called HUSD. The stablecoin is tradeable on the Huobi Global exchange as an alternative to Tether, according to a statement by Huobi.
Binance USD (BUSD)
Paxos and the Malta-based exchange Binance announced on September 5, 2019, that Paxos would issue a New York State Department of Financial Services-approved U.S. dollar-backed stablecoin called Binance USD (BUSD). It is an ERC-20, Ethereum-based token. It will be issued and redeemable through the Paxos wallet in exchange for U.S. dollars or PAX stablecoins. Paxos will also serve as the custodian of the coin's fiat currency reserves. Initially, it will trade against bitcoin, Binance Coin (BNB) and Ripple (XRP) on Binance.
In October 2019, Paxos announced that it would launch blockchain-settled, U.S.-listed equities after receiving a no-action letter from the SEC, which means the SEC will not take enforcement action against them. According to Charles Cascarilla, CEO and co-founder of Paxos, most of the equities listed by Paxos will be "generally liquid," large-cap, low-volatility stocks.
In October 2020, PayPal announced it had partnered with Paxos to enable buying and selling of cryptocurrency via PayPal, and eventually Venmo, starting in 2021. Paxos will be responsible for ensuring the regulatory compliance of the new service, using its technological assets to facilitate payments, providing liquidity, and managing private keys for PayPal customers' wallets.
In February 2021, Paxos announced its intention to file an application to begin offering equity clearing services with the SEC. Paxos' CEO and Founder Charles Cascarilla said on Coindesk TV that Paxos already settles U.S. equity trades, and that Paxos was committed to becoming a markets infrastructure business similar to the Depository Trust & Clearing Corporation (DTCC).
The company announced on April 6, 2021 that it had settled U.S. equity trades between Instinet and Credit Suisse on the private, permissioned Paxos Settlement Service blockchain within the targeted T+0 (same day) timeframe. The service was offered in accordance with no-action relief from the SEC. Paxos said that it planned to apply to the SEC for a clearing agency license and hoped to be registered with the agency later that year.
In December 2016, Paxos and Euroclear announced that they had completed a test of 600 gold bullion trades on Bankchain, a blockchain-based post-trade platform with a group of banks that included, among others, Scotiabank, Citibank and Societe Generale. In late July 2017, however, Euroclear and Paxos announced the end of their pursuit of a joint precious metals settlement platform. On May 17, 2018 the NYDFS licensed Paxos to offer Bankchain commercially.
With a May 2018 Series B raise of $65 million, Paxos has raised a total of at least $93.3 million in funding.
In November of 2019, the SEC gave the green light to a pilot project led by Paxos in which blockchain would be used to settle trades in stocks in a small subset of the U.S. market in the hope of constructing a faster and cheaper way to process stock trades.
In December 2020, Paxos filed an application with the Office of the Comptroller of the Currency to become a cryptocurrency custodian. If the application is accepted the bank, which would operate out of New York, would be regulated at both the State and Federal levels.
- Paxos Unveils Dollar-Backed Stablecoin Approved by New York Regulator. Coindesk.
- Paxos Standard Token (PAX). CoinMarketCap.
- Top 100 Cryptocurrencies by Market Capitalization. CoinMarketCap.
- Introducing Paxos Standard (PAX). Paxos.
- PAX can now be redeemed instantly, stoking up competition in stablecoin market. The Block.
- Stablecoin projects are paying rebates to traders, and it caused a big headache for Paxos. Theblockcrypto.com.
- Gold-Backed Cryptocurrency Is Almost Here. Fortune.
- Huobi backs new stablecoin under Paxos custody, eyeing regulated stablecoin market opening left by Tether. The Block.
- Binance launching its own USD-pegged stablecoin ‘BUSD,’ with Paxos as custodian. The Block Crypto.
- Paxos to launch settlement of U.S.-listed equities after SEC's no-action letter. Reuters.
- PayPal & Paxos Bring Crypto to Millions of Users. Paxos.
- PayPal will soon offer Bitcoin and other cryptocurrency purchase options. Fortune.
- Paxos Plans to File for a Clearing Firm License. Coindesk.
- Instinet And Credit Suisse Conduct Same-Day Settlement Of Traded Stocks In Historic First With Paxos Settlement Service. PR Newswire.
- ItBit Rebrands as Paxos Amid Blockchain Pivot. Coindesk.
- Global Banks Pilot Blockchain-based Gold Settlement Platform. Coindesk.
- Euroclear and Paxos End Blockchain Gold Settlement Partnership. Coindesk.
- DFS CONTINUES ACTIONS TO SUPPORT RESPONSIBLE INNOVATION IN NEW YORK’S FINTECH INDUSTRY. New York State Department of Financial Services.
- Paxos Overview. Crunchbase.
- Blockchain Makes Inroads Into the Stock Market’s $1 Trillion Plumbing System. The Wall Street Journal.
- Paxos files application with U.S regulator to obtain a national bank charter. The Block.
- Paxos Becomes Latest Crypto Firm to File for Federal Bank Charter. Coindesk.