NYDFS Authorizes First Gold-Backed Virtual Currency | Practical Law

NYDFS Authorizes First Gold-Backed Virtual Currency | Practical Law

The New York State Department of Financial Services (NYDFS) announced that it has authorized Paxos Trust Company LLC (Paxos) to offer PAX Gold, an asset-backed virtual currency that is pegged to gold, and Binance USD (BUSD), a stablecoin pegged to the US dollar.

NYDFS Authorizes First Gold-Backed Virtual Currency

Practical Law Legal Update w-022-0244 (Approx. 3 pages)

NYDFS Authorizes First Gold-Backed Virtual Currency

by Practical Law Finance
Published on 11 Sep 2019 • USA (National/Federal)
The New York State Department of Financial Services (NYDFS) announced that it has authorized Paxos Trust Company LLC (Paxos) to offer PAX Gold, an asset-backed virtual currency that is pegged to gold, and Binance USD (BUSD), a stablecoin pegged to the US dollar.
On September 5, 2019, the New York State Department of Financial Services (NYDFS) announced that it has authorized Paxos Trust Company LLC (Paxos) to offer two new virtual currencies:
PAX Gold is the first gold-backed virtual currency approved by NYDFS.
Paxos issued a press release accompanying the launch of PAX Gold, stating that the PAX Gold token is transferable on the Etherium blockchain, with each token representing one fine troy ounce of London Good Delivery gold bars stored in Brink's London vault.
Paxos partnered with Binance, a global cryptocurrency exchange, to launch the stablecoin BUSD. According to a separate Paxos press release, BUSD will be available on the Paxos platform in late September.
In May 2015, NYDFS issued Paxos a limited purpose trust company charter and, in September 2018, authorized it to offer Paxos Standard (PAX), its first stablecoin (see Legal Update, NYDFS Authorizes Two Stablecoins).
Paxos operates the itBit Exchange, a cryptocurrency exchange offering services relating to the trading and custody of virtual currencies. Paxos now offers three virtual currencies approved by NYDFS:
  • PAX.
  • PAX Gold.
  • BUSD.
NYDFS stated that it applied standards relating to anti-money laundering (AML), anti-fraud, customer protection, and cybersecurity as part of the approval process for both PAX Gold and BUSD.
For information on virtual currency regulation, see Practice Note, Virtual Currency Regulation: Overview and Virtual Currency and Digital Asset Regulatory Tracker.