In a significant development for the stablecoin industry, Paxos, one of the largest stablecoin issuers, has received regulatory approval to extend its product offering to the Solana (SOL) blockchain.
The expansion, scheduled to launch on January 17, 2024, follows a directive from the financial regulator ordering Paxos to halt the minting of Binance’s BUSD tokens earlier this year due to “several issues.”
New York’s DFS Grants Paxos First Trust Charter
Paxos has established itself as the world’s most regulated stablecoin issuer, with a track record of issuing regulated stablecoins at scale.
According to a Fortune Magazine report, the company obtained the first trust charter granted to a crypto firm under the digital asset regulatory framework implemented by the New York Department of Financial Services (NYDFS) in 2015.
Notably, the NYDFS remains the sole US financial regulator to have established a comprehensive regulatory framework for cryptocurrencies, attracting industry players such as Coinbase and Gemini.
Paxos initially obtained NYDFS approval to issue its inaugural stablecoin, Paxos Standard (now known as USDP), in 2018. Unlike other USD-pegged stablecoins like Tether and Circle’s USD Coin, Paxos exclusively issues USDP on the Ethereum (ETH) blockchain due to NYDFS restrictions.
Walter Hessert, Head of Strategy at Paxos, emphasized that Paxos’s commitment to regulatory compliance “fosters trust” with partners such as MercadoLibre, PayPal, and Mastercard, assuring them of “robust customer protections.” On this matter, Walter Hessert stated:
Paxos is the most regulated stablecoin issuer in the world. We are the only company that has been issuing regulated stablecoins at scale—period.
Paxos Chooses Solana For Stablecoin Expansion
Solana launched in 2020, gained popularity for its potential to enhance transaction speeds and reduce costs compared to Ethereum. Although Solana faced challenges due to its association with Sam Bankman-Fried, its native token SOL has recently gained significant traction.
Hessert believes that Solana’s speed and cost advantages over Ethereum will make it an “attractive option” for Paxos’ partners looking to implement stablecoins in various use cases, ranging from cross-border remittances to payments for goods and services.
Paxos’s latest stablecoin project, PYUSD, developed in collaboration with PayPal, stands as its most notable initiative through 2023. Hessert anticipates that companies like PayPal will be keen to expand their operations to Solana.
USDP Enters Solana Blockchain
Per the report, Paxos’s initial offering on Solana will be USDP, which currently holds a market cap of approximately $370 million compared to USDC’s nearly $25 billion and Tether’s $94 billion.
Paxos acknowledges that the regulatory approval process for expansion to Solana entailed an exhaustive review, including an assessment of Solana’s blockchain, compliance protocols, and internal risk framework.
While Paxos plans to seek approval for stablecoin issuance on other layer-1 and layer-2 blockchains, specific examples were not disclosed.
Ultimately, the report suggests that as Paxos paves the way for broader adoption of stablecoins, the Solana expansion marks a significant milestone in the company’s journey towards regulatory compliance, innovation, and the facilitation of new use cases within the digital asset ecosystem.
As of the time of writing, the price of SOL stands at $94.60, indicating a significant uptrend of 8.2% in the past 24 hours. This impressive increase in value further reinforces the bullish momentum experienced by SOL across all time frames.
The last 30 days have been particularly noteworthy, as SOL has gained 73%, demonstrating the token’s current bullish momentum.
Featured image from Shutterstock, chart from TradingView.com