Paxos Trust Company, the bankchain & blockchain solutions provider, has launched a stablecoin 'Paxos Standard (PAX), fully collateralized 1:1 by the U.S. dollar. The PAX is approved and regulated by the New York State Department of Financial Services (NYDFS) and the company claims that it is world's first regulated crypto asset.
The stablecoin PAX is built on the Ethereum blockchain and offers the benefits of crypto-assets such as immutability and decentralized accounting. Since it is fully collateralized by dollars, Paxos Standard offers a liquid, digital alternative to cash that is available 24/7 for instantaneous transaction settlement and is fully redeemable.
Fiat collateralized stablecoins are among the most popular form of stablecoins. This kind of stablecoins needs the regular audit to ensure that the money against which the currency is issued is not being siphoned off. This method of creating a stablecoin also involves a third-party custodian, who acts as the guarantor of the fact that these are indeed backed by a fiat currency.
Also Read: Everything You Want To Know About Stablecoins: Pros, Cons, Best Stablecoins
As Paxos is the trust company, it is a fiduciary and qualified custodian of customer funds, ensuring greater protection. Also, the dollar deposits are always held in segregated accounts at multiple Federal Deposit Insurance Corporation (FDIC)-insured U.S.-domiciled banks. Charles Cascarilla, CEO and co-founder of Paxos said:
"In the current marketplace, the biggest hindrances to digital asset adoption are trust and volatility. As a regulated Trust with a 1:1 dollar-collateralized stablecoin, we believe we are offering an asset that improves on the utility of money."
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 explains. Investors who trade digital assets through Paxos' itBit exchange or over-the-counter (OTC) desk have the option to withdraw digital assets to Paxos Standard instantaneously.
Paxos Standard has been designed as an Ethereum token written according to the ERC-20 protocol so that anyone with an Ethereum wallet will be able to send and receive Paxos Standard tokens. The smart contract has been audited by smart contract auditor Nomic Labs and account balances will be audited by top U.S. auditors.
The cryptocurrency exchange Gemini, founded by twin brothers Cameron and Tyler Winklevoss, has also launched a stable value coin or a regulated stablecoin 'Gemini dollar', pegged 1:1 to the U.S. dollar (USD).
