Paxos Under Investigation by NYDFS
•The New York Department of Financial Services (NYDFS) is reportedly investigating Paxos, the issuer of Binance USD (BUSD) and native stablecoin USDP.
•Paxos also operates PAXG, a gold-backed cryptocurrency that stores real-world assets in Brinks Vault, London.
•The company applied for a full banking charter with the OCC but has not been asked to withdraw its application or denied the charter.
Background on Paxos
Paxos is a prominent player in the stablecoin market and operates in New York with a BitLicense from the NYDFS as well as Major Payments Institution license from Singapore’s regulator. The company applied for a full banking charter from the US Office of the Comptroller of the Currency (OCC). After an implosion of TerraUSD, NYDFS published guidelines for stablecoin issuers to follow and Paxos likely observed these requests as part of ongoing efforts to secure its full banking charter.
Investigation into Paxos
The investigation into Paxos comes following their application for a full banking charter. Reports suggest that central finance authorities have expressed concerns over this matter which could be what has drawn attention from authorities. Notably, Kraken was forced by SEC this week to close staking facilities which could have contributed to such investigations.
Impact on Crypto Markets
The expanded investigation into Binance’s flagship stablecoin could spell big trouble for the industry if it leads to any repercussions against them. Markets are understandably anxious regarding any potential outcome while all three tokens remain pegged at this time.
As regulators move towards legislating crypto industry this year, investors must remain vigilant about any developments concerning Paxos’s investigation and its impact on crypto markets going forward.