According to recent reports, the New York Department of Financial Services is looking into Paxos, a significant player in the stablecoin market that issues both Binance USD (BUSD) and the native Paxos stablecoin USDP. Paxos issues both of these cryptocurrencies (NYDFS).
It’s possible that this is what caught the notice of the authorities, as the SEC ordered Kraken to shut down its staking facilities earlier this week.
Paxos’ gold-backed cryptocurrency, known as PAXG, is another idea that has the potential to attract attention. A real-world asset token (RWA) that provides investors with access to gold stored at Brinks Vault in London.
At the time of this writing, the PAXG, BUSD, and USDP all continue to be tied.
After submitting an application for a full banking charter, Paxos will be investigated.
An inquiry of Paxos is being conducted as a direct result of the company’s request for a complete banking charter, which served as the impetus for the request. Despite what appears to worry on the part of central financial regulators, the blockchain infrastructure business with headquarters in New York has positioned itself as a leader in the sector.
Because Paxos was able to get the highly sought-after BitLicense from the New York Department of Financial Services, the company is now authorized to carry on business in the state of New York. In addition, Paxos has strengthened its foothold in the Asian market by acquiring a major payments institution license from the regulatory body in Singapore. This was done with the intention of expanding the company’s operations throughout the region.
Allegations that the US Office of the Comptroller of the Currency (OCC) was thinking about making the company drop its application for a full banking license have been strongly denied by Paxos. Paxos was accused of being forced to withdraw its application for a banking charter. Despite the fact that the company in question has unequivocally refuted such accusations, such claims have continued to make their rounds.
We are aware of the fact that Paxos was granted a temporary banking charter by the OCC in the year 2021. indicating that the authorities might not be totally opposed to the concept of properly licensing the issuer of the security.
In fact, in the wake of the collapse of the Luna ecosystem, which was brought on by TerraUSD, the New York Department of Financial Services (NYDFS) issued standards for stablecoin issuers to comply with in order to protect consumers. Paxos most likely came across these queries as part of the ongoing measures it is taking to secure its complete banking charter. This endeavour is being carried out by Paxos.
The markets are tense, particularly because Paxos operates BUSD at a time when uncertainty surrounds the Binance exchange. This is because regulators appear set to move on legislating the cryptocurrency business this year.
An expanded inquiry into the major exchange’s flagship stablecoin might create significant difficulties for the industry as a whole.
08 Mar 2023
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