New York Regulator Investigating Stablecoin Issuer Paxos Standard

Updated on Jul 27, 2024 at 3:38 pm UTC by · 3 mins read

Binance said that it’s closely watching the developments of a probable investigation of Paxos Trust Co.

In another regulatory escalation in the crypto landscape of the United States, Binance’s stablecoin partner Paxos Standard faces an investigation from the New York State Department of Financial Services (NYDFS).

Paxos Staandard Probed by New York Regulator

A person familiar with the matter told Bloomberg that NYDFS has recently started probing Paxos. However, the exact scope of the investigation isn’t still clear as of now. apart from BUSD, Paxos also has its own native stablecoin, the Pax Dollar in the market.

A spokesperson for NYDFS stated that he can’t comment on the investigation but added: “The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing”.

Paxos Trust Co. works as a regulated entity under the New York State Department of Financial Services. Besides, the company’s website also stresses consumer protection and says that the reserves for both the stablecoins that it issues are entirely in cash and US treasuries.

As we know stablecoins are digital assets pegged to fiat currencies such as the US dollar. Underpinning these digital assets are the matching reserves of other assets like cash and bonds.

However, due to some past failures and blowups, stablecoins have been largely part of different controversies. Last year, the collapse of TerraUSD stablecoin forced regulators to have a deeper look at the stablecoins market.

In partnership with Binance, Paxos operates the BUSD stablecoin which is currently the world’s third-largest stablecoin with a market cap of $16 billion. Its native stablecoin Paxos Dollar has a market value of $859 million.

Binance Responds to the Latest Development

Being a Paxos partner, Binance is closely watching the developments with the investigation of Paxos Trust Co. by NYDFS. In a statement, Binance said that they will continue to monitor the situation adding that “BUSD is a 1-to-1 backed stablecoin that is one of the most transparent stablecoins in existence”.

The New York State Department of Financial Services is one of the strictest regulators currently in the US. It requires crypto service providers to secure BitLicense which comes along with regulatory oversight. Back in 2015, the New York regulator granted Paxos a limited-purpose trust company charter.

NYDFS has been keeping a close vigil on all crypto firms operating under its jurisdictions. Last month in January, the regulator reached a $100 million settlement with Coinbase for letting customers open accounts with insufficient background checks.

Share:

Related Articles

Binance Strengthens Compliance Requirements for Crypto Transfers in South Africa

By April 23rd, 2025

Binance has introduced stricter compliance rules for South African users, requiring detailed sender and receiver info for crypto transfers.

Whale Deposits $14M SOL to Binance, Price Dip Ahead?

By April 22nd, 2025

Solana is currently trading near $140 as a whale deposits $13.9M to Binance for a potential sell-off.

62,181 Ethereum Moved from Galaxy Digital to Binance, What is Happening?

By April 18th, 2025

Galaxy Digital transfers over $99 million in Ethereum to exchanges, raising questions about market strategy and investor sentiment.

Exit mobile version