With a U.S. federal framework for stablecoins on the horizon, the industry stands at a crossroads. Soon, all stablecoin issuers in the United States will face prudential regulation requirements—a development that represents both a challenge for many and validation for those companies that saw regulation as a way to build trust with customers. 

At Paxos, forthcoming legislation is confirmation of our long-held approach. While others now scramble to adapt, Paxos has been an industry leader in this space for years, redefining what responsible digital asset infrastructure looks like. 

The Paxos Standard

Paxos has operated under the purview of the New York Department of Financial Services (NYDFS) since 2015, when Paxos Trust Company LLC (“Paxos Trust”) became the first firm approved by NYDFS to operate in crypto and blockchain as a limited purpose trust company. This foresight didn't happen by accident; it reflected our fundamental belief that digital assets would only achieve mainstream adoption through proper regulatory frameworks that protect consumers and ensure financial stability. 

With a decade of trust, transparency and scale behind us, we have already set the standard for regulatory-first digital finance. 

Prudential Regulation vs. Money Transmitter Licenses (MTLs)

As a regulated financial institution supervised by NYDFS, every aspect of our operations – from our product design to our corporate governance to our customer support – has NYDFS oversight. 

Our regulators require that our stablecoin reserves are always held in fully segregated accounts protected from bankruptcy, which provides legal consumer protections for our customers. For example, in the event of Paxos Trusts’ insolvency, New York banking law states that customer assets are returnable to customers and not used to satisfy the debt of Paxos. Compare this to stablecoin issuers that operate only under money transmitter license (MTL) or money services business (MSB) registrations. These issuers are not qualified custodians, do not submit to comprehensive oversight or product approval processes and do not uphold institutional-grade risk management standards. U.S. federal regulation is right to ensure that this is no longer a workable model for stablecoin issuance. 

Paxos has upheld its commitment to innovating within regulated frameworks even as it has expanded its global footprint. 

We work alongside first-tier prudential regulators all over the globe that reflect our dedication to sound prudential oversight. In addition to supervision by the NYDFS, Paxos affiliates are also regulated by the Monetary Authority of Singapore, the Financial Services Regulatory Authority of the Abu Dhabi Global Market and the Finnish Financial Supervisory Authority. 

Partnering with the World’s Premier Financial Institutions

This regulatory posture has enabled Paxos to become the trusted infrastructure provider behind some of the world’s most respected financial and technology brands in the world. Companies like PayPal, Interactive Brokers, Mercado Libre and Mastercard rely on Paxos to power their digital asset strategies – not just because of our technology, but because of the regulatory rigor that underpins it. 

With more than 10 million active wallets, over $160 billion in tokenized assets and $3.5 billion in annual deposit and withdrawal volume, Paxos has proven that compliance at scale isn’t just possible – it’s essential.

What’s Next?

As we look ahead, Paxos eagerly anticipates the finalization of comprehensive stablecoin legislation in the United States—a framework long-needed by both industry participants and consumers alike. This regulatory clarity will establish the foundation for mainstream digital asset adoption while providing essential guardrails for innovation. 

Our journey as a prudentially regulated trust company since 2015 has positioned us uniquely within the ecosystem – not merely as participants, but as pioneers who recognized early that meaningful regulation creates stronger, more resilient markets. As others now navigate these new requirements, we stand ready to serve as a model for productive collaboration with regulators, demonstrating how compliance and innovation can advance hand-in-hand. 

The future of finance is regulated, transparent and accessible – and Paxos remains committed to leading the way.

To learn more about Paxos regulatory-first approach, contact policy@paxos.com.