NYDFS Reportedly Probing BUSD Issuer Paxos Trust

New York-based blockchain infrastructure platform Paxos Trust Company has come under investigation by the United States authorities in relation to a regulation issue whose scope has currently not been disclosed. A person familiar with the matter who asked to remain anonymous explained that the New York State Department of Financial Services (NYDFS) has opened a probe into the company.

At the time of this writing, the NYDFS had not made any official statement concerning the investigation. However, a spokesperson mentioned that “The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.”

Paxos Refutes Rumors About Banking Charter

This comes at the same time when the company which is also the stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP) refutes the fact that the Office of the Comptroller of the Currency (OCC) refused it a national bank charter. Paxos explained that the OCC never asked it to withdraw the application for a full banking charter. Notably, the stablecoin issuer already received preliminary approval two years ago.

So far, it has been 22 months after the issuance of the preliminary approval and this was scheduled to expire after 18 months which means that the opening is 4 months overdue. Once the full banking charter is approved, Paxos Trust will automatically be a federally-regulated digital asset bank together with competitors like Apollo’s custodian Anchorage, and Protego. 

Hence, no license will be required from Paxos to operate in U.S. states that mandate such. Meanwhile, both Paxos and Circle, the stablecoin USDC issuer, received permission from the Monetary Authority of Singapore (MAS) to offer their services in the region.

Circle CSO Dante Disparte described the approval as a milestone that has the capacity to “demonstrate the potential of digital currencies, open payment systems, and innovation-forward fintech regulations.”

“We’re excited to have the MAS as our regulator. Paxos will safely accelerate consumer adoption of digital assets globally in partnership with the world’s biggest enterprises.”

Additionally, Paxos has inked an applaudable number of partnerships in various ecosystems including that with Latin America neobank Nubank,  and Israeli-based bank Leumi Bank amongst others.