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Stablecoin issuer Paxos probed by New York regulator

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Paxos Trust, the issuer of Binance’s BUSD stablecoin, is reportedly being investigated by the New York State Department of Financial Services (NYDFS).

See related article: Binance makes Korea comeback with GOPAX acquisition

Fast facts

  • While the exact scope of the investigation is unclear, the probe was confirmed to Bloomberg by an unnamed person familiar with the matter.
  • An NYDFS spokesperson told Bloomberg that the regulator could not comment on ongoing investigations.
  • Paxos is also the issuer of its U.S. dollar-pegged stablecoin, Pax Dollar (USDP), the sixth largest stablecoin by market capitalization, according to CoinMarketCap data.
  • The probe may be part of a larger U.S. crypto de-banking, which may be a risk according to Jonas Betz, a crypto analyst based in Germany. “Investors should be mindful of a possible U.S. crypto de-banking operation led by the Fed and Office of the Comptroller of the Currency (OCC), which according to speculations have prepared measures that are deemed draconian and are aimed to kill crypto,” wrote Betz, in a LinkedIn message to Forkast.
  • On Thursday, Paxos denied speculation that it was asked to withdraw its application for a national trust bank charter from the OCC, or that it was denied the charter, adding that “Paxos continues to work constructively with the OCC.”
  • Crypto service providers in New York are required to obtain a BitLicense to operate. Paxos was granted a limited-purpose trust company charter by the regulator in 2015.

See related article: Binance suspends international U.S. dollar transfers, CEO indicates issues with banks

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