Blockchain Trust Firm Paxos to Launch Precious Metal-Backed Stablecoin Later This Year

Paxos Technology Solutions LLC, a New York-based fintech firm that is focused on “mobilizing” money, gold, securities, and other assets at “the speed of the internet,” is reportedly planning to introduce a digital token that will be backed by precious metals such as gold.

Chad Cascarilla, the CEO at Paxos, which has received $93.3 million in funding since being established in 2012, revealed in an interview (published on March 11th, 2019) with Fortune’s Balancing the Ledger that Paxos’ precious metal-backed digital token would “definitely” be launched at some point this year.

Cascarilla, a finance graduate from the University of Notre Dame, explained that developing a gold-backed crypto token could potentially be useful as it would allow investors to “take a [real-world] commodity [and] tokenize it.” Proponents of this method argue that by tokenizing real-world assets, it becomes easier, faster, and more efficient to conduct transactions.

Amount Of Gold You Have In Vaults Should Equal Number Of Outstanding Gold Tokens

Elaborating on how traditional assets can be tokenized on blockchains, Cascarilla remarked:

In order to put something [on] a blockchain [network], you have to make sure you have the right amount of inventory in the real world versus what is [kept on] the blockchain. How you do with a gold token is how much gold do you have in a vault equals how many gold tokens outstanding.

Cascarilla, a former financial analyst at Goldman Sachs, added that Paxos’ status as a licensed financial services company allows it to access the traditional banking system - in order to ensure and prove that they have enough assets in reserves to back the number of tokens they’ve issued.

Commenting on the difference between the Ethereum-based Paxos Standard Token (PAX) and other 1-to-1 USD-backed stablecoins introduced last year, Cascarilla said that PAX’s circulating supply has been fully audited and it’s approved and regulated by the New York State Department of Financial Services (NYDFS). According to Cascarilla, the PAX stablecoin also has a high level of liquidity.

Paxos Completed $65 Million Series B Funding Round In May 2018

First launched as a bitcoin (BTC) trading platform called itBit, the early stage venture-funded startup rebranded to Paxos recently and it now manages a trust company charter in New York. This allows Paxos to access some of the same banking services that are available to large financial institutions. This reportedly includes the ability to serve as a custodian for traditional financial assets.

In May 2018, Paxos had raised $65 million through a Series B funding round which was led by RRE Ventures, Liberty City Ventures, and prominent investor Jay Jordan. In December 2018, PAX token’s total transaction volume (to date) had surpassed $5 billion. This, just three months after the USD-backed stablecoin had been launched (in September 2018). At that time, the market capitalization of all PAX tokens in circulation stood at approximately $174 million.

At press time, the market cap of PAX tokens stands at $113 million according to CryptoCompare data.

Coinbase Cuts Interest users Earn on USDC Stablecoin by 88%

San Francisco-based cryptocurrency exchange Coinbase has cut the interest users can earn on the USDC stablecoin with the platform by 88%, from a 1.25% APY to 0.15%, according to an email the firm shared.

As CryptoGlobe reported, Coinbase started letting its eligible U.S. users earn 1.25% per year on the stablecoin in October 2019. At the time the firm said the move was in line with its mission “to make crypto accessible to everyone.”

The 88% drop in rewards puts Coinbase in line with major banks in the U.S. that offer similar savings rates. Large banks like the Bank of America, HSBC, Chase, and Wells Fargo offer savings accounts with no minimum balance requirements offering yields as low as 0.01%, while newer businesses, according to TheBalance, offer accounts with no minimum requirements offering up to 1.5% a year.

The average rate, according to the same source, is at 0.09% which means Coinbase’s rewards rate for USDC holders is still above the average being offered. The USDC stablecoin itself was launched in September 2018 as a product of CENTRE, a collaborative open-source technology project built by Coinbase and Circle.

Since then the stablecoin has become the second-largest in the cryptocurrency space, behind only Tether’s USDt token. In March of this year, during the crypto market crash, Tether’s stablecoin saw its supply surpass the 6 billion mark, while USDC surpassed 600 million.

At press time, there are over $9.19 billion worth of Tether’s USDt in circulation, while there are now $736 million worth of USDC tokens in circulation. It’s worth noting users can earn interest on USDC and USDt tokens on other platforms, including decentralized finance protocols.

Featured image via Pixabay.