Stablecoin Issuer Paxos Takes Solana Plunge, Scores Clearance To Broaden Offerings

Stablecoins issuer Paxos has been granted regulatory clearance to broaden its offerings onto the Solana SOL/USD blockchain.

Plans to initiate this expansion are set for Jan. 17, 2024.

Paxos "is the most regulated stablecoin issuer in the world," according to Walter Hessert, the firm's head of strategy. In an interview with Fortune, he declared Paxos as "the only company that has been issuing regulated stablecoins at scale — period.”

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Paxos, co-founded by Charles Cascarilla, holds the distinction of being the first cryptocurrency firm to receive a trust charter under the digital asset regulatory framework established by the New York Department of Financial Services (DFS) in 2015.

DFS is currently the only U.S. financial regulator with a comprehensive crypto framework, attracting prominent companies like Coinbase Inc. COIN and Gemini.

In 2018, Paxos obtained DFS approval for its initial stablecoin, initially named Paxos Standard and later rebranded to USDP in 2021.

Stablecoins, such as USDP, are digital tokens pegged to a base asset, like the U.S. dollar.

In contrast to its main rivals, Tether USDT/USD and Circle USDC/USD, Paxos issues USDP exclusively on the Ethereum ETH/USD blockchain due to DFS restrictions.

While competitors like Circle may issue their stablecoins on multiple blockchains, there's a lack of clarity about the oversight of these operations, Hessert said.

“From a growth perspective, you’d like to issue across every single chain,” he added. “Circle and other players can issue on to other protocols, but no one knows who’s overseeing it — or what their process is.”

Paxos has reportedly fostered trust with companies like MercadoLibre, Paypal PYPL, and Mastercard MA in an effort to ensure customer protections are upheld.

Despite its regulated status, Paxos has encountered challenges.

The company's partnership with Binance for issuing the stablecoin BUSD/USD faced scrutiny when DFS directed Paxos to cease issuing the token after concerns arose about Binance’s creation of a synthethic version of stablecoin.

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