Description
The company’s main product is Bankchain, a cloud-based platform as a service (PaaS) blockchain settlement solution for capital markets that launched in 2012 and has offices in New York City, New York, Singapore, and London, England. In 2016, Paxos partnered with Euroclear to provide blockchain settlements for London's bullion market and this partnership is said to have ended in July 2017. The company is offering the Paxos Standard (PAX) cryptocurrency, the itBit cryptocurrency exchange, a cryptocurrency backed by gold called Paxos Gold (PAXG), a stable coin cryptocurrency called Binance USD (BUSD) that is pegged to the US dollar, asset custody under a regulated Trust Company, and post-trade automation for precious metals, base metals, and FX markets.
History
Founded in 2012 under the name itBit, and headquartered in Singapore, this bitcoin exchange sought to differentiate itself from consumer-focused exchanges by delivering a higher level of security and compliance. The goal was to attract interest from institutional investors, and make trading in bitcoin similar to a traditional currency exchange. Security was enhanced with a cryptocurrency wallet, multi-factor authentication and DDOS attack mitigation. Identity verification was built in, as well as screening and monitoring for suspicious activity.
The New York State Department of Financial Services issued its first charter for a bitcoin exchange to itBit in May of 2015. The move allowed the company to accept customers in the United States, and granted a measure of legitimacy to virtual currency. The process of obtaining the charter took itBit more than a year. The company had previously been serving its foreign customers from Singapore.
At the same time, the company announced it had raised $25 million in new financing, as well as the appointment of three members to its board of directors, Sheila Bair, former FDIC chairwoman, Bill Bradley, former Democratic senator from New Jersey and member of the Senate Finance Committee, and Robert H. Herz, a director of both investment banking firm Morgan Stanley and mortgage financier Fannie Mae.
In 2016, itBit was rebranded as Paxos, and the company expanded to provide services using blockchain, the technology underpinning virtual currency.
In 2017, Paxos completed the first pilot for a new London bullion settlement service, Euroclear Blockchain. During the pilot, over 600 over-the-counter test bullion trades settled over a two-week period. Among the participants were Citigroup, INTL FCStone, MKS PAMP Group, Scotiabank and Societe Generale. Settlement of unallocated gold is a capital-intensive process, and the platform aimed to reduce costs incurred by participants through instant settlement and simultaneous delivery versus payment.
The state of New York's Department of Financial Services authorized Paxos to trade cryptocurrencies such as ether, litecoin, stellar lumens and bitcoin cash on its exchange. The announcement was made on June 14 of 2018.
In September 2018, Paxos received New York state approval to issue a stablecoin, the Paxos Standard, which is tied to the U.S. dollar in order to give it more stability. Paxos has set up relationships with traditional banks to hold the U.S. Dollars. The tokens are held by the exchanges. Rather than using computers to audit the blockchain through the mining process, third-party auditors are employed to help ensure that the number of dollars held exactly matches the number of tokens issued.
