There are approximately 10,000 active crypto assets available today, and that number continues to grow as the crypto ecosystem grows, with global adoption increasing and platforms continuously expanding their asset offerings. However, not all new and emerging crypto assets will be seen as equally secure and compliant.
This dynamic will likely continue as the market matures and regulatory uncertainty around specific assets persists.
In such an environment, when enterprise customers consider which assets to engage with, they certainly want to choose from among the most secure assets available – but how do they tell the difference?
The answer is in how digital asset evaluations are performed, a process that will continue to become an increasingly important focal point in the future of crypto.
What is Paxos’ digital asset evaluation?
Every crypto asset is different. These differences include the blockchain protocol, programmability, market capitalization, regulatory status and general investor excitement around the asset. For enterprises launching a crypto offering or building on their existing offerings, figuring out how to evaluate the trustworthiness of a digital asset can seem overwhelming.
Paxos digital asset evaluation is the process through which Paxos assesses the risks and security associated with an asset and ultimately decides which assets to list.
Paxos always recommends partners conduct their own research, but as the leading regulated blockchain infrastructure platform, we have unique insight and a comprehensive understanding of the digital asset ecosystem, which is why we built our rigorous due diligence process to ensure all new asset listings are safe and fully compliant.
Before considering a new asset offering, Paxos is guided by specially developed criteria within our digital asset evaluation process that help us decide what digital assets to list.
Our detailed evaluation helps set best-in-class standards for token listings and ensure they are safe and compliant. This means our partners can go to market faster with the full suite of Paxos digital assets knowing that we’ve done exhaustive research.
The evaluation process includes three distinct phases:
- Market assessment;
- Due diligence;
- Approvals – from Paxos’ risk management committee and our board of directors.
See the specific aspects of each phase in the process articulated in the infographics below.
Phase I: Market Assessment and Prioritization
Paxos regularly reviews a list of the top 100 digital assets by market cap and then prioritizes the assets based on four criteria to determine their eligibility for the next phase of the selection process.
Phase II: Due Diligence
If an asset is deemed eligible during the market assessment and prioritization phase, it is cross-functionally assessed through various lenses: governance, regulatory, compliance, legal, liquidity, information security and technology.
Phase III: Universal Approval
If a digital asset makes it through the due diligence phase, Paxos’ internal risk management committee and board of directors must approve the asset to confirm its selection.
The digital asset becomes available to our partners to list on their platforms if approved.
Paxos’ industry-leading standards in digital asset evaluation
This evaluation process was borne from Paxos’ commitment to ensuring the enterprises using our crypto brokerage service are offering a robust set of digital assets without sacrificing their reputations – or the safety of their customers.
Paxos is determined to be an industry leader in using a rigorous evaluation process when assessing and adding a new asset. With uncertainty inherent in parts of the crypto ecosystem, Paxos wants to ensure that every new asset we provide is safe and compliant. This enables our partners to go to market in complete confidence knowing that in addition to their own due diligence, extensive research has been conducted by Paxos on each asset.
Assets that passed the Paxos’ evaluation process include AAVE, UNI, LINK and MATIC, all of which were added to our platform.