US-based Paxos, the owner of the itBit crypto exchange, said on Monday it had launched a new stablecoin after securing approval from the New York Department of Financial Services (NYDFS). Dubbed Paxos Standard (PAX), the coin is pegged to the US dollar and uses the Ethereum ERC20 protocol.
NYDFS gave PAX the green light on Monday, and the coin was released on the same day. The new cryptocurrency aims to offer a digital alternative to fiat money as it is available at any time, Paxos said in a statement. The dollars backing PAX are held in a US bank that has the Federal Deposit Insurance Corporation (FDIC) pass, the company added without disclosing the name of the financial institution.
“When Paxos Standard tokens are in circulation, the corresponding dollars are held in reserve. Upon redemption for dollars, Paxos Standard tokens are immediately destroyed. Tokens are only in circulation when the corresponding dollars are in custody,” the company explained.
Along with PAX, the NYDFS authorized another US dollar-pegged stablecoin project on Monday, Gemini Dollar (GUSD). It is an initiative of US billionaire twins Tyler and Cameron Winklevoss, who own one of Paxos’ main competitors – the Gemini crypto exchange.
“As part of the approval of these new products, DFS has established required conditions to ensure that each trust company maintains robust policies and procedures to address risks and apply New York’s strong standards and regulations regarding anti-money laundering, anti-fraud, and consumer protection measures,” the regulator said in a joint statement regarding the PAX and GUSD approvals on Monday.
Paxos Standard and Gemini Dollar have entered a stablecoin market where Tether (USDT) is the largest player by market capitalizations. Several key crypto industry figures, including ShapeShift CEO Erik Voorhees, praised the new projects as they have regulatory approval and can bring stability to the market.
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