Paxos is the umbrella platform hosting the PAX Gold token (PAXG) and Pax Dollar (USDP) assets, as well as the itBit Digital Asset Exchange. As one of the most regulated active crypto projects, Paxos provides a Stablecoin as a Service platform to institutional and enterprise customers. Paxos aims to assure full transparency, security, and honesty surrounding assets backing the USDP stablecoin. Moreover, the Paxos ecosystem includes settlement services for enterprises, including securities and commodities.
In this article, we are going to dive deep into the Paxos ecosystem, covering everything from the Pax Dollar (USDP) stablecoin to settlement solutions for institutions. Plus, we’ll look at the popular PAX Gold token (PAXG) and the Stablecoin as a Service product for enterprises. Moreover, we’ll explore the regulation and compliance standards Paxos proudly offers.
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What is Paxos?
Paxos is a fully regulated blockchain ecosystem offering a variety of financial cryptocurrency products to both small and large-scale enterprises. The project aims to facilitate a new open financial paradigm ameliorating the traditional, slower, and less cost-efficient financial system. Further, the Paxos ecosystem provides a variety of financial products catering to individual crypto traders and leading global enterprises alike. The mission is to reduce cost, speed, and inefficiencies to create a frictionless global payments system, available to anyone, anywhere.
As such, the breadth of services available spans from the itBit crypto exchange and Paxos Crypto Brokerage, to custody, trade, and Stablecoin as a Service products. These are only some of the Paxos financial products we will discuss in this article. Also, the Paxos ecosystem includes the popular PAX Gold token (PAXG) and the newly-named Pax Dollar (USDP).
With tremendous popularity surrounding the PAX Gold token (PAXG) and Pax Dollar (USDP) stablecoin assets, Paxos has secured over $500 million in funding from many high-end investors. This includes Mithril Capital, Declaration Partners, and PayPal Ventures. Moreover, current Paxos clients include payment giants Revolut, StoneX, and PayPal.
Regulation and Compliance
Paxos is regulated by the New York State Department of Financial Services (NYDFS) and is subject to various third-party audits. The project operates continuous audits and financial reporting ensuring transparency and trust with investors, partners, and the traditional financial system. Paxos hopes to seamlessly interweave and improve the legacy system. Therefore, this requires solid proof of fair play. As such, Paxos has a partnership with a national-ranking auditing firm, Withum. Withum ensures Paxos maintains consistent reserve assets to back each and every Pax Dollar (USDP) in existence. Moreover, these reserves are held in various US banks.
Regulatorily-compliant crypto exchanges and services must hold a BitLicense or Money Services Business (MSB) designation. Alongside these compliances, Paxos also meets the New York State Department of Financial Services (NYDFS) anti-money laundering (AML) requirements. Moreover, Paxos is subject to regular examination of capital reserve and consumer protection compliances. The NYDFS is infamously seen as the “toughest oversight organization”. Paxos believes working with the NYFDS will offer the highest security and transparency over the protection of customer funds.
Paxos for Crypto Investors
The first section of the Paxos ecosystem offers different services and products for the everyday crypto investor. Below, we cover the three core features Paxos has to offer.
PAX Gold (PAXG)
The PAX Gold token (PAXG) is pegged to the value of one fine troy ounce of gold. This gold is stored securely in vaults under the custody of Paxos Trust Company. As such, anyone who owns a PAXG token has real-life ownership of the gold used to back the token. Plus, Paxos provides a “lookup tool” for searching the Ethereum blockchain for their gold. By entering an Etheruem wallet address, the lookup tool retrieves data regarding the serial number of the gold. Also, token holders can view other physical characteristics too.
Furthermore, customers can have fractional ownership of gold bars. Tokenizing gold on the blockchain in this way boasts several advantages over physical ownership of gold. Not only does it remove the need for secure vaults, but it also makes trading gold extremely fast and straightforward while minimizing exposure to settlement risk. Moreover, customers can exchange PAXG tokens on the Paxos platform for fiat currency, unallocated gold, and allocated gold.
Pax Dollar (USDP)
Another key element of the Paxos ecosystem is the Pax Dollar (USDP) stablecoin. Originally the Paxos Standard stablecoin (PAX), Paxos rebranded its asset to the Pax Dollar (USDP) stablecoin in August 2021. Several stablecoins have come under scrutiny for their lack of full transparency surrounding the assets backing the stablecoins. However, holders of the USDP stablecoin token need not fear this issue. The Pax Dollar is one of the most recognized and regulated stablecoins in the crypto industry. All USDP stablecoin cash reserves and cash equivalents are safely stored and are redeemable 1:1 for US dollars. Paxos’ assurance to customers includes the ability to redeem their cryptocurrency stablecoins for fiat US dollars at any time. The Pax Dollar offers a true one-to-one backing.
Using the Pax Dollar (USDP), anyone anywhere can send and receive stable US dollar value assets with much greater flexibility and availability than the traditional financial sector. Moreover, the fees for using the Paxos platform are far less too. Paxos offers the ability to seamlessly transfer assets cross-border, near-instantly, with zero discriminatory requirements. In turn, Paxos is using blockchain technology to help people achieve financial freedom. Furthermore, offering a decentralized stable-value asset can help bank the under and unbanked.
As the Pax Dollar (USDP) must adhere to the strictest regulatory oversight by the New York State Department of Financial Services (NYDFS), users of the USDP stablecoin can have faith their assets are complying with the “highest standards of consumer protection”. Needing only a smartphone, anyone anywhere can create an account with Paxos and store and send USDP across borderless markets.
itBit Digital Asset Exchange
Paxos additionally hosts the crypto exchange, itBit. itBit Digital Asset Exchange also meets the strictest compliance regulations from the New York Department of Financial Services (NYDFS). Furthermore, itBit boasts some of the deepest fiat-to-cryptocurrency liquidity pools. This includes the USD:PAXG, USD:ETH, and USD:BTC pools, and more. itBit has access to a network of leading global clients spanning over 100 countries.
As a centralized exchange (CEX), users of itBit don’t shoulder the responsibility of asset storage. Rather, assets are securely stored offline in physically protected cold storage hardware wallets. itBit offers a frictionless user experience (UX) ideal for newcomers to the industry. This being said, the ease of navigation doesn’t take away the multiple layers of platform security protocols and “institutional-grade” protection that itBit can offer, thanks to Paxos. Moreover, itBit keeps the UX simple with a flat-rate per-transaction fee structure and no fees for withdrawing crypto.
Paxos for Enterprise
The second set of services and products available are specifically for enterprise use cases. This includes the Stablecoin as a Service and Crypto Brokerage products.
Crypto Brokerage
Paxos offers a Crypto Brokerage service for its enterprise clients, presenting a safe and opportune avenue to introduce cryptocurrency payment services into traditional business models. As blockchain technology becomes an increasing priority for strategic business development plans, Paxos offers enterprises a holistic turnkey solution.
The turnkey solution includes managing the licensing and compliances across international markets. Moreover, enterprises can access application programming interfaces (APIs) that seamlessly integrate with current IT infrastructures. Paxos APIs include fully-regulated custodial services, onboarding services including KYC (know your customer) screening for end-users, anti-money laundering (AML) screenings, and tax reporting.
Furthermore, Paxos has extensive insurance cover, including $300 million in cold wallet storage. Plus, Paxos is the first crypto project to secure SOC 2 Type 2 certifications valid with all Paxos products. These certifications refer to the security and storage of personal consumer data. Certifications must strictly adhere to principles of security, availability, privacy, and confidentiality.
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Stablecoin as a Service
Paxos is also a Stablecoin as a Service provider. As the creator of the most liquid and regulated stablecoin, Paxos makes it simple for partners to create their own stablecoins safely and without friction.
Paxos provides qualified custody of stablecoins with funds held in “dedicated omnibus cash accounts at FDIC-insured US banks or in Treasury Bills”. Plus, balances undergo monthly audits to validate the backing of assets.
Furthermore, Paxos collaborates with New York financial regulators to gain formal approval for the use and issuance of bespoke branded stablecoins globally. Also, the Paxos stablecoin platform uses application programming interfaces (APIs) to facilitate seamless technical integration and provide Stablecoin as a Service clients with the best possible customer experience.
Paxos Settlements for Institutions
The crypto products available for institutions include different settlement services. Below we outline the two Paxos settlement services for institutions, covering securities and commodities.
Commodities Settlement Service
Paxos offers an automated Commodities Settlement solution to minimize the risks involved with counterparty payments while simplifying the process. Additionally, with enterprise-grade security, the service generates automatic confirmations using various formats, which can detect any discrepancies.
Also, Paxos identifies “trade compression” opportunities which suggest trades to offset positions. Further, users can take advantage of simultaneous settlements and “subsequent settlements from net amounts”. Plus, Paxos can import data from multiple sources automatically via several formats. These include email, JSON, CSV, XLS, XML, PDF, SFTP, API, and SWIFT.
Securities Settlement Service
Paxos Settlement Service is a private permissioned blockchain network that enables users to settle equities using “delivery-versus-payment settlement finality”. This network aims to reduce the structural costs associated with securities settlements.
As an alternative to existing settlement platforms, Paxos Settlement Service offers trade execution without change to trading behavior along with locked-in reports and contract comparisons. Plus, the service enables the funds to be made available for immediate redeployment.
Exploring Paxos Ecosystem & the Pax Dollar (USDP) Summary
Paxos is a multi-asset project hosting a wide array of financial products catering to everyday investors and leading global enterprises. The range of products on offer includes the popular PAX Gold token (PAXG), the most regulated and safe-assured way to gain exposure to gold through the crypto market. Additionally, one of the top stablecoins in the industry, Pax Dollar (USDP) offers anytime full 1:1 redemption for US dollars. The USDP stablecoin is one of the few stablecoins with full transparency surrounding asset backing.
Using blockchain technology as a foundation, Paxos is helping people achieve financial freedom through permissionless and borderless payment services. Moreover, with the use of a smartphone, anyone can preserve their wealth and store stable-value assets using the Paxos app.
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