Stablecoin issuer Paxos under investigation by US regulators

Paxos may be under investigation by the US Office of the Comptroller of the Currency

US stablecoin issuer Paxos has been asked by the US Office of the Comptroller of the Currency (OCC) to withdraw its application for a national banking license, Fortune magazine reported today.

Paxos has issued two stablecoins, Pax Dollar (USDP) and Binance USD (BUSD). In particular, BUSD is widely distributed as a major cryptocurrency exchange Binance brand. At the time of writing, it has a market capitalization of 2 trillion yen ($161.6 billion) and is also traded as a main currency on Binance.

Paxos denied reports about the withdrawal of its license application by the OCC, arguing that the State Trust Bank license application is still in progress.

To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.

—Paxos (@PaxosGlobal) February 8, 2023

Paxos (Paxos National Trust) will provide custody services, stablecoin management, payments, exchanges and other services after receiving “conditional approval of national banking license” from OCC in April 2021. Regulatory approved as an entity.

Conditional approval is a provisional measure based on the business plan. They were given 18 months to realize it, but since the deadline has passed, it is speculated that it has something to do with the news reports.

connection:Tether Updates Reserve Assets, Cuts Secured Loans

Will NYDFS also conduct a separate survey?

The Paxos stablecoin is also approved and overseen by the New York State Department of Financial Services (NYDFS). This regulation primarily governs how stablecoin reserves are managed.

US virtual currency media CoinDesk reported on the 10th that NYDFS is investigating Paxos based on its own investigation, but the details of the investigation have not been disclosed.

In June 2022, NYDFS announced that it would separate assets and reserves of stablecoin issuers and periodically report backing assets to prevent stablecoin “runs” in the wake of the Terra (formerly LUNA) shock. instructed the licensee.

Additionally, in January 2023, the NYDFS issued new guidance asking businesses not to hold customer cryptocurrencies mixed. The sloppy management system and fraudulent methods of the virtual currency exchange FTX, which went bankrupt in November last year, have been revealed, and it seems that this was a response.

connection:Paxos Reveals Reserve Breakdown for USD Stablecoins