New York regulator approves stable coin tokens
Written by Hannah McGrath
Paxos, a US-based blockchain startup, has been approved by New York regulators to launch a ‘stablecoin’ currency pegged to the US dollar.
The firm claims the Paxos Standard, which will be pegged to the dollar on a 1:1 basis, is the world’s first regulated crypto asset. It added that the dollar pegging will reduce the volatility seen by other cryptocurrencies and digital assets.
Its approval from the New York State Department of Financial Services came on the same day the regulator gave the green light to another stablecoin, the Gemini dollar, which is traded on the Gemini Trust company exchange run by the Winkelvoss twins.
Brothers Cameron and Tyler Winklevoss are US Olympic Rowers and bitcoin entrepreneurs known for successfully suing Facebook founder Mark Zuckerburg for $65 million after they claimed he stole their idea for the ConnectU social network whilst they were fellow students at Harvard.
They have since worked as internet entrpeneurs and venture capitalists with a holding in Bitcoin worth an estimated $1 billion at current levels, according to industry website CoinDesk.
Both Paxos Standard amd the Gemini dollar coins are built on the Ethereum blockchain. Paxos says the fully collateralised Standard coin offers a liquid, digital alternative to cash that is available for instantaneous transaction and is fully redeemable for fiat currency.
Verified Paxos customers can purchase and redeem tokens with US dollars and the digital tokens are released while the corresponding dollars are held in reserve. Once redeemed, the tokens are destroyed.
Charles Cascarilla, chief executive and founder of Paxos, said the Paxos Standard offered financial markets the ability to transact a fully collateralized asset with the benefits of blockchain technology and oversight from financial regulators.
He added: “We believe that Paxos Standard represents a significant advancement in digital assets, leveraging the oversight and stability of the traditional financial system and enabling a frictionless global economy.”
The value of Bitcoin briefly rose above $6,300 (£4,839) after the NYDFS approved the digital cryptocurrencies.