Blockchain Startup Paxos Creates Dollar-Backed Stablecoin
New York–based blockchain startup Paxos has created a new regulated stablecoin fully collateralized by the US dollar.
Dubbed Paxos Standard, the ethereum blockchain-based stablecoin, backed 1:1 by the dollar, has been approved and will be regulated by the New York State Department of Financial Services (NYDFS). The stablecoin offers a liquid, digital alternative to cash that is available 24/7 for instantaneous transaction settlement and is fully redeemable.
“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.”
To maintain the Paxos Standard’s value, tokens are only in circulation when the corresponding dollars are in custody. Upon redemption for dollars, the tokens are immediately destroyed. Investors using the itBit exchange or OTC desk will be able to redeem their crypto holdings for Paxos Standard “instantaneously.” The token will also be listed on other venues and will trade under the ticker symbol PAX.
“In the current marketplace, the biggest hindrances to digital asset adoption are trust and volatility, said Cascarilla. “As a regulated Trust with a 1:1 dollar-collateralized stablecoin, we believe we are offering an asset that improves on the utility of money.”
In May of this year, Paxos was licensed by the NYDFS as a regulated trust, giving it many of the same privileges as a bank including the ability to take custody of mainstream financial assets.
“As a Trust company, Paxos is a fiduciary and qualified custodian of customer funds, and can therefore offer greater protections for customer assets than any other existing stablecoin,” the company said. “Dollar deposits are always held in segregated accounts at multiple FDIC-insured US-domiciled banks. The smart contract has been audited by smart contract auditor Nomic Labs and account balances will be audited by top US auditors.”
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