Bloomberg: New York regulator opens investigation into Paxos
The New York State Department of Financial Services (NYDFS) has launched an investigation into Paxos, the infrastructure company and issuer of stablecoins. Bloomberg reports.
Reasons were not specified.
The department is in constant contact with supervised entities to understand vulnerabilities and risks to consumers and institutions associated with volatility in the crypto market, — the regulator said.
In 2015 the company received a BitLicense from NYDFS, full national trust bank charter from the OCC. The article notes that the OCC license allows crypto-related activity in the state of New York.
NYDFS ordered Paxos to stop issuing BUSD, according to WSJ. A Binance representative commented to The Block that the infrastructure company informed the exchange of regulator requirements.
“As a result, BUSD’s market capitalization will gradually decline over time. Paxos will continue to service the product, manage redemptions, and provide additional information as needed,” he added.
Paxos announced that it is halting its cooperation with Binance regarding BUSD. From February 21, the company will halt the minting of new tokens in line with regulator directives, but will continue supporting redemption and conversion activities at least until February 2024.
On February 8, 2023, the firm denied reports that Paxos became the holder of a conditional license. In April 2021 Paxos was the issuer of US dollars-backed stablecoin. The company emphasised that it maintains constructive relations with the regulator.
To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.
— Paxos (@PaxosGlobal) February 8, 2023
Paxos is the issuer of BUSD and USDP . Their market capitalisations are $16.2 billion and $855 million, respectively, according to CoinGecko. They rank third and seventh in the segment by this measure. Asset backing is entirely consisting of US Treasuries and deposits in commercial banks.
The company also backs the Pax Gold token, with a total market value of $494.4 million. The asset is backed by physical gold.
In 2012 Paxos launched the trading platform itBit. The exchange has served as a bridge for many financial institutions, including Mastercard, Interactive Brokers, Mercado Bitcoin, Nubank.
The company also launched Paxos Settlement Service — a blockchain platform for settlement of securities. Its clients include Bank of America, Credit Suisse, Societe Generale and the broker Instinet, a unit of the Japanese holding Nomura.
In November 2022 the firm received a license from the Monetary Authority of Singapore. Paxos announced substantial expansion of the team in this country.
In January, NYDFS began an investigation into Gemini over statements about the safety of client assets.
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