Paxos, a stablecoin issuer, has recently gained approval from the New York Department of Financial Services (DFS) to introduce its products on the Solana blockchain. Until now, Paxos was only permitted to issue its Pax Dollar (USDP) stablecoin on the Ethereum network, a limitation set by the DFS. The company is set to launch Paxos on Solana on January 17, 2024.
The Pax Dollar is a stablecoin that is fiat-collateralized, meaning it is backed on a 1:1 basis by the United States dollar.
According to a report by Fortune, Paxos received a “non-objection” to extend USDP from Ethereum to Solana following a thorough review. Walter Hessert, the head of strategy at Paxos, stated that the review scrutinized Solana’s internal risk framework.
Hessert highlighted Paxos’s status as a highly regulated stablecoin issuer, in contrast to its competitors like Tether (USDT) and USD Coin (USDC), which are not regulated by the DFS. He emphasized, “We are the only company that has been issuing regulated stablecoins at scale—period.” He also noted that Solana’s faster transaction speeds and lower costs, compared to Ethereum, might make it a more attractive option for Paxos’ partners. This could potentially lead to partners like PayPal expanding their stablecoin, PayPal USD (PYUSD), to Solana.
Solana is recognized for its high transaction speed and low cost as a layer-1 protocol. It can handle approximately 50,000 to 65,000 transactions per second (TPS), significantly outperforming Ethereum’s current capacity of around 30 TPS. Despite experiencing several outages in 2022, Solana has maintained 100% uptime in the recent months.
Paxos is actively seeking regulatory approvals for other layer-1 and layer-2 blockchains, as per the head of strategy. The company has been broadening its international presence in recent months. On November 16, Paxos announced preliminary approval from Singapore’s regulator for a new entity aimed at launching a U.S. dollar-backed stablecoin. Additionally, Paxos obtained approval from Abu Dhabi’s regulator to issue stablecoins and provide digital asset services in the emirate.
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