About the Company
Who created Paxos Standard?
Paxos Standard (PAX) was created by Paxos, a financial technology company on a mission to modernize finance by mobilizing assets at the speed of the internet.
Paxos was the first virtual currency company to receive a charter from the New York State Department of Financial Services. As a chartered limited purpose trust company with fiduciary powers under the Banking Law, Paxos is able to offer regulated services in the crypto-asset and virtual commodities space.
The Paxos team comes from a wide variety of backgrounds with a diverse array of experiences ranging from Wall Street to Silicon Valley. It’s led by CEO and co-founder Charles Cascarilla, who has spent his career as a customer, analyst, investor and now creator of financial technology.
Why did Paxos create Paxos Standard?
Paxos Standard was built to improve the larger financial ecosystem, with the ultimate goal to create a frictionless global network, where assets can be mobilized, exchanged and settled seamlessly and instantaneously.
Paxos envisions a future where digital-assets, cash, commodities or securities can move anywhere at any time. As a US dollar-backed token, Paxos Standard can instantaneously settle the payment side of transactions.
About the Product
What is Paxos Standard?
Paxos Standard is a token leveraging blockchain technology to create increased speed, mobility, flexibility and accessibility within the global financial system. Paxos Standard is a “stablecoin,” which has characteristics unique to digital-assets, but without price volatility. Paxos Standard tokens are backed 1:1 by USD in US bank accounts. Issued by the Paxos Trust Company and running on the Ethereum blockchain protocol, Paxos Standard introduces an unprecedented combination of disruptive technology and regulated transparency to the world of finance.
How is Paxos Standard different from other stablecoins?
While other stablecoins exist, none have been able to provide the functionality, sustainability and regulatory oversight that a reliable stablecoin needs. Paxos Standard has a number of distinguishing properties, including:
- Regulation: Paxos Standard is issued by Paxos Trust Company, a financial institution that is overseen by its regulator, the New York State Department of Financial Services.
- Guaranteed cash deposits: All cash deposits that collateralize Paxos Standard are held at U.S.-domiciled, FDIC-insured banks.
- Audited: A nationally top-ranking auditing firm Withum will perform monthly attestation procedures on Paxos Standard bank accounts.
- Security: Transaction monitoring and surveillance conducted by leading partners provides an additional layer of compliance oversight.
- Daily purchase and redemption windows: Allows funds to be moved freely and frequently.
- No fees: Because Paxos issues Paxos Standard tokens directly, it can offer no fees.
Who should use Paxos Standard?
- Anyone with an Ethereum wallet can send or receive Paxos Standard tokens
- Financial institutions and trading firms seeking a digital asset that can hedge against the volatility of other digital assets, or a way to settle transactions outside of traditional banking hours
- Digital asset custodians and exchanges looking to provide the option of a regulated fiat-backed digital-asset as an alternative to current offerings
- Individuals and merchants looking for a more efficient USD-based payments system than current incumbent offerings
What can Paxos Standard be used for today? What about in the future?
The crypto-asset space is early in maturation, and initial use cases for PAX will be distinct from future use cases.
Today, Paxos Standard can be used to limit exposure to crypto-asset volatility, to remove cross-border transaction fees and to move between crypto-assets with ease or as payment for other blockchain-based assets.
In the future, Paxos Standard can be used for consumer payments, offering a stable store of value for those outside the United States that face currencies with unpredictable volatility.
How does the price of Paxos Standard remain stable if it’s a crypto-asset?
Because Paxos Standard is fully collateralized 1:1 with USD in bank accounts, it is not susceptible to significant price fluctuations. Additionally, a third-party auditor ensures that dollar deposits match PAX tokens in circulation, so the collateralized status of Paxos Standard is never in question. Paxos Standard token will always have a redemption value of 1 PAX = $1 USD.
The number of PAX tokens in circulation will always exactly match the number of dollars in reserve, so the price ratio will always be 1:1.
Why does Paxos Standard use Ethereum?
Ethereum is a decentralized blockchain-based ledger that supports smart contracts, and is the most widely-used digital-asset platform. Paxos Standard follows the ERC-20 protocol, which is a standard for smart contracts on the Ethereum blockchain. The ERC-20 standard specifies a set of standard functions to manage transactions and track account balances. Some of the advantages of the Paxos Standard ERC-20 token are listed below:
- Seamless wallet support and exchange integration. Any provider that has implemented ERC-20 code can support the token on their platform
- An open network enables use-cases impossible on a closed network
Maximum end-user trust
- Users do not have to trust a given exchange to hold their token
- Reduced liquidity risk – each user can redeem from our regulated trust which publicly ensures they have enough cash on hand
Is Paxos Standard a security under U.S. law?
No, our legal counsel has provided a legal opinion that Paxos Standard does not meet the definition of a security under either the Securities Act of 1933 or the Securities Exchange Act of 1934.
Where are customer funds kept?
Customer funds are held in segregated accounts at FDIC-insured, U.S.-domiciled banks.
Is Paxos Standard audited?
Yes, we have engaged nationally top-ranking auditing firm Withum to perform attestation procedures (established by the AICPA) on Paxos bank accounts holding dollar deposits and the PAX tokens on a month-end basis to further enhance the transparency of the token.
Is there a cap on how many Paxos Standard tokens will be created?
No, there is no cap on the number of Paxos Standard tokens that Paxos can generate. Paxos Standard tokens are only created when dollars are deposited. They only exist when dollars are in custody. When Paxos Standard tokens are redeemed for cash, the tokens are immediately destroyed.
Tokens can be purchased or redeemed only on a 1:1 basis with USD.
Are there fees for using Paxos Standard?
Paxos charges no fees.
*Please note that customer banks may charge a fee for initiating a wire deposit or receiving a wire deposit. Paxos reserves the right to make changes to the fee structure at any time.
There is a $100 PAX minimum conversion requirement.
What is the Ethereum address of the Paxos Standard smart contract?
Is the smart contract code publicly available?
The Paxos Standard ERC-20 contract code is available for technical review at https://github.com/paxosglobal/pax-contracts. Anyone can verify that the code will operate as Paxos intends. Because of the simplicity of the one-to-one model, Paxos Standard can be represented in a simple, readable smart contract. This contract code has been audited by an independent third-party smart contract security auditor. Read the audit here.