Paxos launches USDP on Solana, expanding beyond Ethereum
Stablecoin issuer Paxos has received the green light from the New York Department of Financial Services (DFS) to extend its operations to the Solana blockchain. Until now, Paxos has been restricted to issuing its Pax Dollar (USDP) stablecoin exclusively on the Ethereum network.
The authorization for this expansion comes after a rigorous review process by the DFS, focusing on Solana’s risk framework. Walter Hessert, the head of strategy at Paxos, highlighted the “extensive and exhaustive review” that led to the DFS’s “non-objection” decision.
Pax Dollar, a fiat-collateralized stablecoin backed 1:1 by the US dollar, is scheduled to debut on the Solana platform on January 17, 2024. Paxos’s move to Solana is notable due to the blockchain’s high transaction speed and lower costs compared to Ethereum. Solana is capable of processing 50,000 to 65,000 transactions per second (TPS), significantly outperforming Ethereum’s current capacity of about 30 TPS.
“The expansion of our stablecoin platform to support Solana marks an important step towards making stablecoins ubiquitous for everyday consumers. Paxos has set the standard for oversight, reserve management and issuance in the stablecoin market. By integrating USDP with Solana, we’re making it easier for anyone to get and use the safest, most reliable stablecoins,” Walter Hessert, Paxos’s head of strategy, said in a statement.
Despite facing several outages in 2022, Solana has recently reported a 100% uptime over the past few months, boosting confidence in its reliability.
Paxos’s expansion isn’t limited to Solana. The company is actively seeking regulatory approval to operate on other layer-1 and layer-2 blockchains. Additionally, Paxos has been broadening its international presence. In November, the company announced preliminary approval from Singapore’s regulatory authorities to launch a U.S. dollar-backed stablecoin. Moreover, Paxos also received approval from Abu Dhabi’s regulators to issue stablecoins and offer digital asset services in the emirate.
Earlier this year, the U.S. Securities and Exchange Commission (SEC) said it plans to sue Paxos for violating investor protection rules. The issuer was already told of the planned enforcement action as the regulator claims that Binance USD is an unregistered security.
The full scope of the investigation is unclear. But the US regulators have been questioning crypto firms over their practices around handling clients’ digital assets. The probe has gathered pace in the wake of the collapse of Sam Bankman-Fried’s crypto empire.