NY Regulator Approves Dollar-Backed Stablecoin Paxos

New York-based Paxos, a startup which is in the business of developing and providing blockchain technology to the financial services industry, has announced the launch of Paxos Standard (PAX), a new digital cryptocurrency that is collateralized 1:1 with the U.S. dollar (USD). The stablecoin has secured the necessary approval from the New York Department of Financial Services (NYDFS), and will be regulated by the agency.

Ethereum-based Stablecoin to list on Multiple Exchanges

Paxos Standard digital token is built on Ethereum's ERC-20 standard, and the crypto token can be exchanged between any two compatible wallets on the Ethereum network. (For more, see What is ERC-20 and What Does it Mean for Ethereum?)

Each Paxos Standard stablecoin token is fully backed by an appropriate dollar reserve held at U.S.-domiciled Federal Deposit Insurance Corporation (FDIC)-insured banks.  Auditing firm Withum will be responsible for the necessary attestation procedures on the reserve accounts and PAX tokens on a month-end basis. Paxos already operates as a trust company (a qualified custodian), and has the necessary legal approval from the U.S. Securities and Exchange Commission (SEC) to hold and maintain client funds.

Stablecoins are the breed of cryptocurrencies that are backed by a real-world fiat currency, like U.S. dollar or euro, or by another cryptocurrency. Owing to the wide swings observed in the valuations of popular cryptocurrencies like bitcoin  or ethereum, they are often deemed unsuitable as a regular mode of payment. Stablecoins - which essentially represent a fiat currency like dollar in a digital form and remains free of high volatility - are gaining popularity. Paxos Standard digital token adds to the list of stablecoins like Tether (USDT) and Gemini dollars which offer the best of both worlds – stable valuations like fiat money, and instant and low-transaction fee like cryptocurrencies.  (See also, Is Stablecoin the Answer to All Cryptocurrency Problems?)

Typically, PAX will always be redeemable one-to-one against the US dollar with an ideal exchange rate of 1 PAX = $1 USD.  The token is available on Paxos' itBit exchange or over-the-counter (OTC) trading desk, and any existing Paxos clients can exchange their dollar or cryptocurrency holdings using Paxos Standard tokens. The token will also be listed on other exchanges with the ticker symbol PAX.

“Paxos Standard gives financial markets the power to transact in a fully USD-collateralized asset with the benefits of blockchain technology and oversight from financial regulators,” said Charles Cascarilla, CEO and co-founder of Paxos. “We believe that Paxos Standard represents a significant advancement in digital assets, leveraging the oversight and stability of the traditional financial system and enabling a frictionless global economy.”

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