NY-regulated Paxos publishes stablecoin reserves in transparency stunt

Rick Steves

Paxos is a Trust Company chartered by the New York State Department of Financial Services (“NYDFS”), obliged to hold all regulated stablecoin reserves in bankruptcy remote, fully-segregated accounts and in only cash and cash equivalents.

paxos

Blockchain infrastructure platform Paxos has announced it will be regularly disclosing the specific financial instruments backing its regulated stablecoins USDP and BUSD in an effort to raise trust in the space.

From now on, Paxos will make public its regulated stablecoin reserves on a monthly basis, providing the CUSIP of all instruments backing USDP and BUSD.

Cash and cash equivalents as mandated by NYDFS

According to Paxos, the platform only backs its stablecoins with cash, overnight loans secured only by US Treasuries, and US Treasuries with a less than 90-day maturity, in compliance with NY regulations.

Paxos is a Trust Company chartered by the New York State Department of Financial Services (“NYDFS”), obliged to hold all regulated stablecoin reserves in bankruptcy remote, fully-segregated accounts and in only cash and cash equivalents.

With Paxos-issued stablecoins being fully backed by a dollar, stablecoin holders can always access their funds and redeem their stablecoins, as assets are not co-mingled with Paxos corporate funds.

Paxos is not allowed to change its reserve composition without explicit approval from the NYDFS and the decision to publish the reports underscores the firm’s commitment to transparency, trust, and full dollar backing.

Charles Cascarilla, Chief Executive Officer and Co-Founder at Paxos, commented: “The only way we can build trust in stablecoins and grow the adoption of this important technology globally is by continuing to embrace robust oversight and providing unprecedented transparency. Our stablecoins are a dollar backed by cash and equivalents and these enhanced disclosures underscore this point. Paxos has always offered the safest US dollar-backed stablecoins.”

Full 1:1 dollar backing for stablecoins has been an issue within the crypto space for years, with Tether (USDT) taking most of the heat from critics and regulators. The latest market crash has led many to believe USDT could lose the peg, but it has successfully held firm against market forces, at least for now.

Regulatory oversight from a primary prudential financial watchdog is key to ensuring consumers that their funds and assets are safe, fully segregated, and bankruptcy remote.  The NYDFS recently issued stablecoin guidance that provides a foundational framework for the structure and issuance of stablecoins.

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