Paxos, a New York cryptocurrency company known for selling stable coins pegged to the U.S. dollar has got the nod from U.S. regulators for both its gold backed stable coin and a USD backed stable coin.
Paxos Trust now has three cryptocurrency tokens, Paxos Standard (PAX), Paxos Gold (PAXG) and Binance USD (BUSD).
This i s the blurb from Paxos’ site:
“Paxos is building a future where all assets– from money to gold to securities–will be digitized and move instantaneously, 24/7. Settlement risk will cease to exist, so trillions of dollars of trapped capital can go to work in a global, frictionless economy.”– Paxos.com
Today, as the first regulated Trust company with blockchain expertise, Paxos is uniquely positioned to mobilize and custody these assets digitally.
Paxos is a New York State-chartered trust company regulated by the New York State Department of Financial Services (NYDFS). As a trust company, Paxos is subject to a higher level of regulatory oversight, ensuring all of its customers’ funds have the highest form of protection.
Paxos trust is safer than holding cryptocurrencies on exchanges or other service providers that only have a Money Services Business (MSB) designation or a BitLicense. Paxos Trust has to meet specific NYDFS capital reserve, consumer protection, compliance, and anti-money laundering requirements and undergo regular exams.
Clients would receive the highest level of security and protection for both crypto and fiat assets that are deposit with Paxos. Paxos chose to select this trust charter because New York is the global financial hub and the NYDFS is the toughest oversight organization. By having this designation, Paxos can offer customers the best security and most trust.
What is Paxos Gold (PAXG)?
The company says the PAXG token provides customers with actual ownership of physical gold. Paxos will even provide the serial number of the corresponding gold bar in London. Customers will also be able to buy and sell Pax Gold tokens on various blockchain networks, which will register the reassign the ownership rights to the gold. Since Paxos is a regulated trust company, clients’ gold is totally secure, even in the event of bankruptcy.
The gold token is the first regulated gold cryptocurrency of its kind, which raises the question of why anyone would want to own it in the first place? After all, gold bugs have plenty of options to get exposure to the yellow metal already from from gold trusts to ETFs to futures contracts on regulated exchanges to physical holdings. Why bother with a blockchain product?
According to Paxos CEO Chad Cascarilla, the token will offer the cheapest way to own gold directly, other than burying coins in your backyard, since Paxos will not charge annual custody fees. In an interview with Fortune, he added that PAX Gold is also cheaper and more redeemable than holding gold through an ETF. He also pointed to other advantages that are intrinsic to cryptocurrencies on a blockchain.
“There’s a lot of overlap in the mentality between the crypto world and those who hold gold,” said Cascarilla. “What you know have is the liquidity, divisibility, and transferability of crypto, while owning gold.”
Clients can hold much lower amounts or much more exact amounts of gold rather than being locked into so many grams or bars, etc, plus it can be exchanged instantly.
It is possible to own tiny fractions of a token, which are divisible out to 18 decimal points. If you purchase PAXG directly, the minimum purchase is 0.01 PAXG (1% of a PAXG token – or roughly $15).
Cascarilla added that owning PAX Gold tokens doesn’t require knowledge of blockchains or cryptocurrency. Those who simply want to buy and hold gold can go to Paxos’s website and purchase the tokens, and let the company take custody of them. But those who wish to actively trade their tokens on an exchange can obtain a digital wallet, sell their tokens or even lend them out.
The service is not free, of course. Storing gold is costly and Paxos will be paying Brinks to guard the gold in its London vault, a cost that will be passed on to Paxos’ customers.
Cascarilla says PAX Gold will make money by charging a small premium on the gold and also by charging a “tokenization” fee at time of initial purchase that will be 1% of the purchase of a single ounce, but that will drop significantly for larger purchases. He adds the Paxos will charge no custody fees, but will charge a transfer fee of 0.02% if a customer wants to buy or sell a token on a blockchain network. Cascarilla also says Gold Pax tokens will be available on cryptocurrency exchanges, but only on non-U.S. based ones for now.
The launch of PAX Gold coincides with an ongoing debate in the financial world of whether gold or Bitcoin, the most famous cryptocurrency, is a superior store of value for investors. One crypto company, Digital Currency Group, has even been running TV ads urging investors to “drop gold.” Paxos’s new token, then, may be seen as a bridge between the two camps.
“It’s a token backed by [physical] gold rather than a token backed by just computer bytes,” Cascarilla said.
What is Binance USD (BUSD)?
Binance USD (BUSD) is a new regulated USD-denominated stablecoin approved by the New York State Department of Financial Services (NYDFS) that will be launched in partnership with Paxos and Binance.
What is Paxos Standard (PAX)?
Paxos Standard (PAX) was built so that money can move fast.
PAX is a digital dollar. Like other crypto assets, it can move instantaneously, anywhere in the world, any time of any day, and it’s programmable. Unlike other crypto assets, PAX is stable. It is backed 1:1 for the U.S. dollar and it’s issued by the Paxos Trust Company, so the funds are carefully protected, audited and regulated.
It’s a piece of our future vision for a frictionless, global economy, where all assets can move anywhere instantaneously, 24/7.
Paxos Standard follows the ERC-20 protocol, which is a standard for smart contracts on the Ethereum blockchain. The ERC-20 standard specifies a set of standard functions to manage transactions and track account balances. Some of the advantages of the Paxos Standard ERC-20 token are listed below:
- Seamless wallet support and exchange integration. Any provider that has implemented ERC-20 code can support the token on their platform
- An open network enables use-cases impossible on a closed network
Maximum end-user trust
- Users do not have to trust a given exchange to hold their token
- Reduced liquidity risk – each user can redeem from our regulated trust which publicly ensures they have enough cash on hand
Please note: In order to send and receive PAX, customers must have an Ethereum wallet that accepts ERC-20 tokens.