New York Superintendent of Financial Services Linda A. Lacewell announced on Sept. 5, 2019 that the New York State Department of Financial Services (DFS) has authorized Paxos Trust Company LLC to offer a gold-backed virtual currency, the first such virtual currency authorized by DFS, as well as Binance USD, a virtual currency pegged to the U.S. dollar.

DFS issued a limited purpose trust company charter in May 2015 to Paxos Trust Company, formerly known as itBit Trust Company LLC, which operates the itBit Exchange, to offer services for buying, selling, sending, receiving, and storing virtual currency. In September 2018, Paxos was authorized by DFS to offer its first asset-backed token – commonly known as a “stablecoin” – pegged to U.S. dollars, Paxos Standard.

DFS has now authorized Paxos to offer PAX Gold, an asset-backed token that is pegged to gold.  In addition, DFS has also now authorized Paxos to offer BUSD, an asset-backed token that is pegged to the U.S. dollar. In total, DFS has approved three asset-backed tokens issued by Paxos: Paxos Standard (PAX), PAX Gold (PAXG), and BUSD.

As part of the approval of products, DFS has established required conditions to ensure that potential risks associated with the issuance and offering of PAX Gold and BUSD have been adequately addressed, and DFS has applied New York’s standards regarding anti-money laundering, anti-fraud, and consumer protection, and cybersecurity measures.

The Paxos Trust Company is a New York limited purpose trust company, regulated by the DFS and is a participant of the Depository Trust Company. According to its No-Action request addressed to the Securities and Exchange Commission, the Paxos Trust Company has also developed a securities settlement service which is a private and permissioned distributed ledger system.  The Securities and Exchange Commission Staff granted conditional and limited no-action relief to provide the Paxos settlement service a phase-in period of 24 months to operate the settlement service for de minimis transactions for the clearance and settlement of listed US equity securities trades without being registered as a clearing agency.