Paxos Trust Company, the esteemed financial institution headquartered in New York, responsible for the issuance of Binance USD (BUSD) and Paxos Dollar (USDP), is currently under the watchful eye of the New York Department of Financial Services (NYDFS). According to a reliable source, the reason for this scrutiny has yet to be disclosed. We will monitor this situation closely and provide updates as they become available.
The company has been embroiled in a series of scandals related to the Federal Bank regulator, resulting in the US Office of the Comptroller of the Currency’s directive to withdraw Paxos’s application for a full banking charter. These developments have been a source of concern for the company and its stakeholders, and we are committed to addressing them with the utmost professionalism and transparency.
Although rumors often dissipate quickly, an ongoing investigation by the state regulator has revealed that a company possessing a provisional bank charter from the OCC in 2021 will be subject to heightened scrutiny compared to other companies. This underscores the importance of maintaining transparency and compliance in the financial industry.
Notably, about the ongoing investigation into Paxos, a representative from NYFDS has stated that the department is steadfastly committed to safeguarding consumers against the potential risks associated with cryptocurrency markets.
Furthermore, the NYFDS stated:
The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.
The spokesperson exhibited a degree of discretion in divulging additional information regarding the ongoing investigation, refraining from elaborating on the cause of the probe.
NYDFS has demonstrated a steadfast commitment to safeguarding the crypto community through the implementation of robust regulations. This is exemplified by the department’s proactive approach in releasing stablecoin guidance last year. Their unwavering dedication to ensuring a secure and stable crypto landscape is commendable.
The department has guided direct stablecoin issuers to secure crypto users by ensuring their stablecoins are pegged to assets. This measure aims to enhance stability and reliability in the crypto market.
