Paxos

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Paxos
Paxosnewlogo.png
Founded 2012
Headquarters New York, Singapore
Key People Charles Cascarilla, CEO; Andrew Chang, COO; Richmond Teo, CEO of Asia
Products Paxos Standard, a stablecoin; custody services
Twitter @PaxosGlobal
LinkedIn Profile
Website www.paxos.com
Releases Company News

Paxos (formerly itBit) is a global exchange offering a platform for buying and selling bitcoin, aimed at both retail and institutional investors.[1] The exchange was founded in 2012 by Charles Cascarilla and Richmond Teo, and is backed by a consortium of venture capital firms - RRE Ventures, Canaan Partners and Liberty City Ventures - as well as by individual investors Jay W. Jordan II and James Pallotta.

Paxos began accepting U.S. customers in May 2015 after being granted a license to operate by the New York State Department of Financial Services (NYSDFS).[2]

Products and Services

PAX Stablecoin

Paxos Trust Company, the successor to itBit Trust Company, was licensed on September 10, 2018 by the New York State Department of Financial Services (NYDFS) to issue a stablecoin - that is, a virtual currency tied to the value of a fiat currency. The coin is called Paxos Standard (PAX) and is tradable on Paxos's cryptocurrency exchange, itBit,[3] as well as on 75 other cryptocurrency exchanges.[4] In mid May 2019, PAX was the 39th largest cryptocurrency by market capitalization according to CoinMarketCap, an online industry data reporting service.[5]

One PAX should have the value of one U.S. dollar, according to the Paxos website.[6] While Bitfinex, Tether and Tether's USDT were being investigated for criminal fraud by the Attorney General of New York, Paxos announced on May 13, 2019, that PAX could be redeemed instantly on the Paxos platform. Delays in redeeming their coins have been a persistent problem for stablecoin users.[7]

The company suffered headaches in late 2018 over its competitor, Gemini, when some traders took advantage of an arbitrage opportunity between Gemini dollars (GUSD) and Paxos' stable coin, PAX. Traders bought GUSD at a 2 percent discount and exchanged vast sums of it for PAX, and then opened accounts under relatives' names to bypass the $10k transaction limit on Huobi, another exchange. In order to redeem those coins for US dollars, they had to go through the original issuer - Paxos. The result was huge numbers of users wanting to cash out their new PAX coins.[8]

In a March 11, 2019, interview with Fortune's The Ledger, Cascarilla said that Paxos was planning on issuing a stablecoin backed by gold "definitely this year." He noted that Paxos's status as a trust company allowed it access to the banking system which would provide transparency and legal certainty around their holding gold. Cascarilla also told The Ledger that Paxos had applied to the U.S. Securities and Exchange Commission for permission to tokenize securities. He did not provide a launch date for that product.[9]

Huobi stablecoin (HUSD)

In July 2019, a digital asset startup called Stable Universal, which was backed by Huobi, launched a stablecoin called HUSD. The stablecoin is tradeable on the Huobi Global exchange as an alternative to Tether, according to a statement by Huobi.[10]

Binance USD (BUSD)

Paxos and the Malta-based exchange Binance announced on September 5, 2019, that Paxos would issue a New York State Department of Financial Services-approved U.S. dollar-backed stablecoin called Binance USD (BUSD). It is an ERC-20, Ethereum-based token. It will be issued and redeemable through the Paxos wallet in exchange for U.S. dollars or PAX stablecoins. Paxos will also serve as the custodian of the coin's fiat currency reserves. Initially, it will trade against bitcoin, Binance Coin (BNB) and Ripple (XRP) on Binance.[11]

Blockchain equities

In October 2019, Paxos announced that it would launch blockchain-settled, U.S.-listed equities after receiving a no-action letter from the SEC, which means the SEC will not take enforcement action against them. According to Charles Cascarilla, CEO and co-founder of Paxos, most of the equities listed by Paxos will be "generally liquid," large-cap, low-volatility stocks.[12]

Brokerage

In October 2020, PayPal announced it had partnered with Paxos to enable buying and selling of cryptocurrency via PayPal, and eventually Venmo, starting in 2021. Paxos will be responsible for ensuring the regulatory compliance of the new service, using its technological assets to facilitate payments, providing liquidity, and managing private keys for PayPal customers' wallets.[13][14]

Clearing

In February 2021, Paxos announced its intention to file an application to begin offering clearing services with the SEC. Paxos' CEO and Founder Charles Cascarilla said on Coindesk TV that Paxos already settles U.S. equity trades, and that Paxos was committed to becoming a markets infrastructure business similar to the Depository Trust & Clearing Corporation (DTCC).[15]

History

The company was founded in Singapore in 2012, and launched in November 2013 after receiving $5.5 million in funding.

In May 2015, the itBit Trust Company became the first company to receive a charter from the NYSDFS which, according to CEO Charles Cascarilla, allows the exchange to operate in all 50 states.[16]

Upon receiving the charter, the company was able to secure an additional $25 million in seed funding. Also, itBit announced the appointment of three board members, former FDIC chair Sheila Bair, former U.S. Senator Bill Bradley and Morgan Stanley's Robert Herz.

itBit's announcement of a partnership with an undisclosed U.S. bank means that U.S. customers of the exchange will have their deposits held by said bank and insured up to $250,000 by the FDIC.[17]

On June 21, 2016, Euroclear and itBit announced a collaboration to explore opportunities in creating a new settlement service for the London gold market using ItBit's proprietary blockchain infrastructure technology and flagship product, Bankchain.[18] In December 2016, Paxos and Euroclear announced that they had completed a test of 600 gold bullion trades on Bankchain, the blockchain-based post-trade platform, with a group of banks that included, among others, Scotiabank, Citibank and Societe Generale.[19] In late July 2017, however, Euroclear and Paxos announced the end of their pursuit of a joint precious metals settlement platform.[20]

In September 2016 Paxos rebranded itself from itBit, which survived the rebranding as a division of Paxos. Paxos was to leverage itBit's distributed ledger technologies.[21]

In December 2016, Paxos and Euroclear announced that they had completed a test of 600 gold bullion trades on Bankchain, a blockchain-based post-trade platform with a group of banks that included, among others, Scotiabank, Citibank and Societe Generale.[22] In late July 2017, however, Euroclear and Paxos announced the end of their pursuit of a joint precious metals settlement platform.[23] On May 17, 2018 the NYDFS licensed Paxos to offer Bankchain commercially.[24]

With a May 2018 Series B raise of $65 million, Paxos has raised a total of at least $93.3 million in funding.[25]

In November of 2019, the SEC gave the green light to a pilot project led by Paxos in which blockchain would be used to settle trades in stocks in a small subset of the U.S. market in the hope of constructing a faster and cheaper way to process stock trades.[26]

In December 2020, Paxos filed an application with the Office of the Comptroller of the Currency to become a cryptocurrency custodian. If the application is accepted the bank, which would operate out of New York, would be regulated at both the State and Federal levels.[27][28]

Key People

itBit Team:

Board of Directors:

Board of Advisors:

References

  1. About Us. itBit.
  2. Bitcoin Exchange Receives First License in New York State. New York Times.
  3. Paxos Unveils Dollar-Backed Stablecoin Approved by New York Regulator. Coindesk.
  4. Paxos Standard Token (PAX). CoinMarketCap.
  5. Top 100 Cryptocurrencies by Market Capitalization. CoinMarketCap.
  6. Introducing Paxos Standard (PAX). Paxos.
  7. PAX can now be redeemed instantly, stoking up competition in stablecoin market. The Block.
  8. Stablecoin projects are paying rebates to traders, and it caused a big headache for Paxos. Theblockcrypto.com.
  9. Gold-Backed Cryptocurrency Is Almost Here. Fortune.
  10. Huobi backs new stablecoin under Paxos custody, eyeing regulated stablecoin market opening left by Tether. The Block.
  11. Binance launching its own USD-pegged stablecoin ‘BUSD,’ with Paxos as custodian. The Block Crypto.
  12. Paxos to launch settlement of U.S.-listed equities after SEC's no-action letter. Reuters.
  13. PayPal & Paxos Bring Crypto to Millions of Users. Paxos.
  14. PayPal will soon offer Bitcoin and other cryptocurrency purchase options. Fortune.
  15. Paxos Plans to File for a Clearing Firm License. Coindesk.
  16. NY grants first banking license to bitcoin exchange itBit. CNBC.
  17. Bitcoin exchange itBit gets NY trust charter, bank partner. American Banker.
  18. Euroclear to Develop Blockchain Gold Settlement System. CoinDesk.
  19. Global Banks Pilot Blockchain-based Gold Settlement Platform. Coindesk.
  20. Euroclear and Paxos End Blockchain Gold Settlement Partnership. Coindesk.
  21. ItBit Rebrands as Paxos Amid Blockchain Pivot. Coindesk.
  22. Global Banks Pilot Blockchain-based Gold Settlement Platform. Coindesk.
  23. Euroclear and Paxos End Blockchain Gold Settlement Partnership. Coindesk.
  24. DFS CONTINUES ACTIONS TO SUPPORT RESPONSIBLE INNOVATION IN NEW YORK’S FINTECH INDUSTRY. New York State Department of Financial Services.
  25. Paxos Overview. Crunchbase.
  26. Blockchain Makes Inroads Into the Stock Market’s $1 Trillion Plumbing System. The Wall Street Journal.
  27. Paxos files application with U.S regulator to obtain a national bank charter. The Block.
  28. Paxos Becomes Latest Crypto Firm to File for Federal Bank Charter. Coindesk.