A Brief History of Paxos
In April 2012, a crypto exchange called itBit was born.
In May 2015, New York State Department of Financial Services (NYDFS) issued “a limited purpose trust company charter” to itBit to “to offer services for buying, selling, sending, receiving, and storing virtual currency.” As Ben Lawsky, the former Superintendent of Financial Services for the State of New York (2011-2015) explained in a tweet on 7 May 2015, this was a big day:
— Ben Lawsky (@BenLawsky) May 7, 2015
Then, on 13 September 2016, itBit officially got rebranded to Paxos, and itBit became a division of Paxos. The press release making the announcement said that the name Paxos is “inspired by a technical term that represents a process for reaching consensus, and that it “underscores the company’s goal to leverage consensus-driven blockchain technology in transforming the way global financial institutions work together.”
Roughly two years later (on 10 September 2018), Paxos announced the launch of stablecoin Paxos Standard (PAX), which is fully-collateralized by the U.S. dollar, is issued by the Paxos Trust Company, and is approved and regulated by the NYDFS. PAX was “designed as an Ethereum token written according to the ERC-20 protocol, so that anyone with an Ethereum wallet will be able to send and receive Paxos Standard tokens.”
On 13 May 2019, Paxos announced via a blog post that instant redemptions for PAX had become a reality:
“We launched PAX with a 1 day redemption window, which was groundbreaking. Then we moved to four-hour windows. Now, we’re setting precedence again by offering immediate redemptions today. (Immediate creations coming soon!) This means whenever you deposit PAX on the Paxos platform, it is immediately available as USD. For that reason, there will no longer be any distinction between your USD or PAX balance on Paxos; all will be held as one, unified USD balance on our platform, and available 24/7 to send as either USD or PAX. Transact at the speed of the internet, unlike ever before”
Binance’s Previous Experience With Fiat-Backed Stablecoins
On 5 June 2019, Bloomberg reported that they had been told by Binance CEO Wei Zhou that Binance would start issuing its own stablecoins “in a matter of weeks to a month or two.” Bloomberg was also told that first fiat-backed stablecoin would be “Binance GBP” (BGBP). Zhou apparently also said that there were plans to introduce further stablecoins backed by other fiat currencies.
Binance’s Partnership With Paxos
Paxos will act as USD custodian and issuer of BUSD. BUSD will be available later this month “on the Paxos platform for direct purchase and redemption 1:1 for U.S. dollars and available on Binance.com for trading initially against BTC, BNB and XRP.”
Rich Teo, Paxos Co-Founder and CEO Asia, had this to say:
NYDFS’s approval of BUSD is a vital step towards long term stability in global crypto markets. We are proud that our stablecoin as a service offering enables trusted companies like Binance to introduce products customized for their users. The Paxos brand symbolizes regulatory integrity, consumer protection and transparency for all of our partners.
As for Binance CEO Changpeng Zhao (aka “CZ”), he stated:
Paxos is leading the digital trusts space and we are excited to work with them in developing our native stablecoin. We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD, including more use cases and utility through the power of stable digital assets.
Further details about this partnership will be unveiled on 12 September 2019 at the Invest: Asia 2019 conference in Singapore.
Featured Image Courtesy of Binance