Speedy and Safe Redemptions Demonstrate Power of Primary Prudential Regulation for Stablecoins
NEW YORK – March 17, 2023 – Paxos, the leading regulated blockchain and tokenization infrastructure platform, has facilitated the safe, steady redemption of more than $7.9B Binance USD (BUSD) in 32 days. On February 13, 2023, Paxos announced it halted minting of new BUSD tokens and that it is ending its relationship with Binance. Paxos redeemed these assets without any loss to customers or market dislocation. This achievement is a testament to Paxos’s strong risk management program and commitment to safeguarding customer assets. BUSD has not experienced sustained price dislocation from its 1:1 peg to the US dollar across various third-party crypto exchanges.
Paxos has upheld its promise to customers by always safeguarding assets in a regulated trust, even through periods of extreme market volatility. Since its inception, Paxos has set the standard for compliance in the blockchain industry by advocating for customer protections and measured governance, including receiving the first New York Department of Financial Services (NYDFS) trust charter for digital assets in 2015. As a result of NYDFS oversight, Paxos built compliance, customer protections, risk management and corporate controls into all aspects of its operations. Paxos custodies all customer assets bankruptcy-remote and under New York State banking law. This structure provides legal consumer protections as opposed to “constructive trusts” of other stablecoin issuers.
Paxos strongly believes all stablecoin issuers should be subject to regular oversight, examination and approval requirements of a primary prudential regulator. Prudential regulators and independent third parties examine, audit and attest to our practices regularly to ensure we can withstand situations of external “stress” typical of the world’s most sophisticated financial institutions. Paxos’ ability to operate and process the smooth redemption of nearly 50 percent of BUSD in circulation in just 32 days speaks to its commitment to clients and the strength of its risk management.
As a good faith actor that embraces transparency and complies with regulatory requirements, Paxos utilizes blockchain technology in responsible ways to develop real world use cases to improve the financial system. Paxos has always supported a regulation-first approach, and encourages regulators to focus efforts on creating a clear and transparent framework that drives the marketplace to redirect capital to companies facilitating uses that protect consumers and derive clear social benefits.
All BUSD remains fully-backed 1:1 with USD cash & cash equivalents held in custody with the company’s NYDFS Trust, and Paxos will continue to support BUSD in circulation for at least one year. All other Paxos products remain unaffected by BUSD redemptions. Paxos will continue accelerating the mainstream adoption of blockchain and tokenized assets by building solutions that are interoperable between digital asset ecosystems and traditional finance. Through its various digital assets like the USDP stablecoin and PAX Gold, partnerships with PayPal, Mercado Libre and Bank of America, and the growth of its securities and commodities settlement networks, Paxos is uniquely positioned in the market to address the blockchain and tokenization needs of global, regulated enterprises.
Paxos is the leading regulated blockchain infrastructure and tokenization platform. Its products are the foundation for a new, open financial system that can operate faster and more efficiently. Today, trillions of dollars are locked in inefficient, outdated financial plumbing that is inaccessible to millions of people. Paxos is replatforming the financial system to enable assets to instantaneously move anywhere in the world, at any time, in a trustworthy way.
Paxos uses technology to tokenize, custody, trade and settle assets. It builds enterprise blockchain solutions for institutions like PayPal, Interactive Brokers, Mastercard, MercadoLibre, Nubank, Bank of America, Credit Suisse and Societe Generale. Paxos is a top-funded fintech company with more than $540 million raised from leading investors including Oak HC/FT, Declaration Partners, Founders Fund, Mithril Capital and PayPal Ventures. With offices in New York, London and Singapore, Paxos takes a global approach to modernizing the financial system.