New York Regulators Launching Investigation into Stablecoin Issuer Paxos

Coindesk has reported that New York regulators are launching an investigation into BUSD and USDP stablecoin issuer Paxos. The report states the probe is being orchestrated by the New York Department of Financial Services (NYDFS).

There is no clarity available as of yet regarding the full scope of the Paxos investigation. The company is well known in the crypto community for issuing the Pax Dollar (USDP) and Binance USD (BUSD), in connection with the crypto exchange.

Paxos Under Investigation

The report states that the New York regulators are officially launching an investigation into stablecoin issuer Paxos. Currently, details are unable to be accessed. An NYDFS spokesperson has made clear the agency’s inability to comment on ongoing investigations.

Although the details on the specifics of the investigation are sparse at the moment, the company had been in the news recently regarding certain rumors regarding the federal bank regulator, the U.S. Office of the Comptroller of the Currency. Specifically, the regulator had asked the company to withdraw its application for a full bank charter, according to the report.

Charles Cascarilla, chief executive officer of Paxos, listens during the Bitcoin 2021 conference in Miami, Florida, U.S., on Saturday, June 5, 2021. The biggest Bitcoin event in the world brings a sold-out crowd of 12,000 attendees and thousands more to Miami for a two-day conference. Photographer: Eva Marie Uzcategui/Bloomberg

“The company received a provisional bank charter from the OCC in 2021,” the report states. Noting that ongoing investigative observation shows it is “under closer scrutiny than its peers may be.” Paxos currently holds a virtual currency license, issued by the New York regulators now behind the investigation.

Similarly, a Paxos spokesperson has denied commenting at the time of Coindesk’s initial report. However, the probe follows the BYDFS publishing stablecoin guidance in June. The document directs issuers “to ensure their stablecoins be fully backed with assets segregated from the issuers’ funds and attested to regularly.”