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Paxos has received approval from the New York Department of Financial Services (DFS) to expand its services to the Solana blockchain. This marks the first time a stablecoin will be issued outside of Ethereum, with a planned launch on January 17, 2024.
This expansion is a significant step for Paxos, which is competing with peers like Circle and Tether for critical market share. “Paxos is the most regulated stablecoin issuer in the world,” said Walter Hessert, the firm’s chief strategy officer.
Paxos has received an “approval” from DFS to expand USDP from Ethereum to Solana, which a spokesperson described as a “thorough and comprehensive review.” The company declined to specify how long the process took.
Hessert did not disclose what kind of information DFS needed for the Solana expansion, citing the confidential audit process. However, he noted that it includes an internal risk framework created by Paxos to evaluate blockchain and its processes, including compliance protocols.
Hessert said Solana's speed and cost relative to Ethereum will make it an attractive option for Paxos' partners looking to apply the stablecoin in use cases from cross-border remittances to payments for goods and services.
For now, Paxos' most high-profile project is PYUSD, a new stablecoin issued in partnership with PayPal. Hessert said he thinks companies like PayPal will want to expand into Solana. Paxos' first Solana-based product will be USDP, which has a market cap of just $370 million, compared to around $25 billion for USDC and around $94 billion for Tether.
*This is not investment advice.