Paxos Trust Company

Paxos Trust Company is a New York-based financial institution and technology company specializing in blockchain,[2] which digitizes and mobilizes assets.[3] The company's product offerings include a cryptocurrency brokerage service, asset tokenization services, and settlement services.[4][5][6] ItBit, a bitcoin exchange run by Paxos, was the first bitcoin exchange to be licensed by the New York State Department of Financial Services, granting the company the ability to be the custodian and exchange for customers in the United States.[7][8]

Paxos Trust Company
FormerlyitBit
TypeLimited purpose trust company
IndustryFinancial technology
Founded2012 (2012)
Headquarters
New York, NY[1]
Key people
  • Charles Cascarilla (CEO and co-founder)
  • Rich Teo (CEO of Paxos Asia and co-founder)
  • Andrew Chang (COO)
Websitepaxos.com

Paxos was founded in 2012[9] and is based in New York City, with offices in London and Singapore.[10] As of December 2020, the company has received $240 million in funding.[11]

History

Charles Cascarilla and Rich Teo founded Paxos in 2012 as the itBit Bitcoin exchange.[12][13] In 2015, the company changed its legal name from itBit to Paxos Trust Company.[14] At the same time, the Department of Financial Services of New York granted Paxos a limited-purpose trust charter,[7] making it the first company in the U.S. approved and regulated to offer crypto products and services.[15][16]

The company received $65 million in a funding round in May 2018.[9] In September 2018, Paxos launched the Paxos Standard stablecoin as one of the industry’s first regulated stablecoins.[17] Paxos introduced PAX Gold, the first regulated gold-backed digital token, in September 2019.[14]

In October 2019, Paxos received a no-action letter from the U.S. Securities and Exchange Commission (SEC) to test a new settlement service for U.S.-listed equities on a private blockchain.[18][6] The service went live in February 2020.[19] In July 2020, Paxos launched its crypto brokerage with Revolut as the first client.[4][20]

In October 2020, PayPal announced that it would offer cryptocurrency buy, hold and sell services to its users through a partnership with Paxos.[21][22]

Products

Crypto brokerage

Paxos provides a crypto brokerage so clients can give their customers access to the cryptocurrency market. The company manages the regulatory and technology components of cryptocurrency trading on behalf of its clients.[4][20]

Paxos Standard

Paxos Standard (PAX), launched in September 2018, is one of the industry's first regulated stablecoins, tied to the U.S. dollar such that 1 PAX = 1 USD.[17][23]

PAX Gold

PAX Gold (PAXG) is a digital asset backed by physical gold.[24] Paxos Trust Company is the custodian for PAX Gold tokens and their associated physical gold bars.[25]

itBit

ItBit is a digital asset exchange approved by the New York State Department of Finance to trade five digital assets: bitcoin (BTC), Ethereum (ETH), Bitcoin Cash, Litecoin (LTC), and PAX Gold (PAXG).[16][26][27]

Post-trade services

Paxos provides post-trade automation services for precious metals and other trades. Services include automation of trade confirmations and settlement among multiple parties.[28]

Securities settlement service

In October 2019, the SEC gave Paxos permission to establish a settlement service for stock trading. Credit Suisse and Société Générale were the first banks to sign on to use the service.[18] Paxos announced it had settled a securities trade on a blockchain for the first time in February 2020.[29]

References
  1. "Who We Supervise". New York State Department of Financial Services. Retrieved 21 May 2020.
  2. "Paxos Trust Company LLC | VCfund.me Data". data.vcfund.me. Retrieved 2020-08-26.
  3. Jessel, Ben. "Credit Suisse And Instinet Go Live With Paxos Settlement Service". Forbes. Retrieved 2020-08-26.
  4. Roberts, Jeff John (15 July 2020). "Revolut bank offers cryptocurrency through Paxos 'plug and play' service". Fortune. Retrieved 29 July 2020.
  5. "Paxos Trust Co LLC". Bloomberg. Retrieved 21 May 2020.
  6. "Paxos Trust Company, LLC; Division of Trading and Markets No-Action Letter: Clearing Agency Registration" (PDF). U.S. Securities and Exchange Commission. Retrieved 29 July 2020.
  7. Popper, Nathaniel (7 May 2015). "Bitcoin Exchange Receives First License in New York State". The New York Times Dealbook. Retrieved 21 May 2020.
  8. Nasr, Reem (7 May 2015). "NY grants first banking license to bitcoin exchange itBit". CNBC. Retrieved 24 July 2020.
  9. Irrera, Anna (31 May 2018). "Blockchain and cryptocurrency startup Paxos raises $65 million". Reuters. Retrieved 24 July 2020.
  10. Hansen, Sarah (8 August 2018). "Bitcoin Custodian Paxos Enters Gold Market With Post-Trade Confirmation Product". Forbes. Retrieved 24 July 2020.
  11. Roberts, Jeff John (17 December 2020). "PayPal joins a major investment round in 'plug-and-play' crypto firm Paxos". Fortune. Retrieved 17 December 2020.
  12. "Bitcoin Exchange itBit says it won part of bitcoin auction". Reuters. 10 March 2015. Retrieved 24 July 2020.
  13. Shieber, Jonathan (7 July 2014). "Seeing Opportunities In The US, itBit Relocates To NYC, Names New CEO". TechCrunch. Retrieved 24 July 2020.
  14. Chavez-Dreyfuss, Gertrude (5 September 2019). "Paxos gets U.S. regulator nod for gold-backed token, dollar-backed stablecoin". Reuters. Retrieved 24 July 2020.
  15. Vigna, Paul (7 May 2015). "BitBeat: ItBit Open Shop In U.S. As a Trust Company, Raises $25 Million". The Wall Street Journal. Retrieved 30 July 2020. It's an approach that is different from other bitcoin startups; itBit will be acting as a regulated fiduciary, responsible for holding its clients assets under the same rules that govern State Street and Rockefeller Trust Co.
  16. Todd, Sarah (7 May 2015). "Bitcoin Exchange itBit Gets N.Y. Trust Charter, Bank Partner". American Banker. Retrieved 24 July 2020.
  17. Chavez-Dreyfuss, Gertrude (10 September 2018). "New York regulator approves Winklevoss, Paxos dollar-linked tokens". Reuters. Retrieved 24 July 2020.
  18. Osipovich, Alexander (7 November 2019). "Blockchain Makes Inroads Into the Stock Market's $1 Trillion Plumbing System". The Wall Street Journal. Retrieved 24 July 2020.
  19. "Blockchain System Cracks U.S. Equities Market for Certain Trades". Bloomberg Law. 20 February 2020. Retrieved 6 August 2020.
  20. Dillet, Romain (15 July 2020). "Revolut partners with Paxos to bring cryptocurrency trading to the US". TechCrunch. Retrieved 30 July 2020.
  21. Irrera, Anna (21 October 2020). "PayPal to allow cryptocurrency buying, selling and shopping on its network". Reuters. Retrieved 21 October 2020.
  22. Dillet, Romain (21 October 2020). "PayPal to let you buy and sell cryptocurrencies in the US". TechCrunch. Retrieved 21 October 2020.
  23. Dillet, Romain (11 March 2020). "Blockchain (the company) lets you borrow USD PAX against collateral". TechCrunch. Retrieved 30 July 2020.
  24. Clifford, Tyler (16 September 2019). "CEO says Paxos offers investors 'confidence of a bank, but the innovation of Silicon Valley'". CNBC. Retrieved 24 July 2020.
  25. Roberts, Jeff John (5 September 2019). "Crypto or Gold? Paxos Offers Both With First Gold-Backed Token". Fortune. Retrieved 24 July 2020.
  26. "DFS Continues to Advance Responsible Growth in New York's Fintech Industry with New Virtual Currency Approvals". New York State Department of Financial Services (Press release). 14 June 2018. Retrieved 24 July 2020.
  27. "Superintendent of Financial Services Linda A. Lacewell Announces Approval of First Gold-backed Virtual Currency in New York State". New York State Department of Financial Services (Press release). 5 September 2019. Retrieved 30 July 2020.
  28. Hansen, Sarah (8 August 2018). "Bitcoin Custodian Paxos Enters Gold Market With Post-Trade Confirmation Product". Forbes. Retrieved 24 July 2020.
  29. "Blockchain System Cracks U.S. Equities Market for Certain Trades". Bloomberg Law. 20 February 2020. Retrieved 24 July 2020.
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