Binance Stablecoin Partner Paxos Under Investigation By New York Dept. Of Financial Services

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Paxos

Paxos Trust, the issuer of tokens under the brand of Binance is under investigation in America. The investigation by the third-largest stablecoin is the latest among regulatory escalations seen in the cryptocurrency sector.

The Dept. of Financial Services of the state of New York has begun probing the activities of Paxos according to an official acquainted with the whole issue. He asked not to be identified while discussing private information. It is also unclear what is the exact purpose and scope of the investigation.

Though the specific motive behind the probing has not been revealed by the financial regulators of New York State, there are reports that the regulators in the state plan on stepping up efforts to protect the interest of consumers. The NYDF has officially stated that it cannot comment on any ongoing inquiry.

Paxos Disclaims Reports Investigation Part Of Banking Requests

The probing of Paxos comes on the heel of a regulatory investigation of the cryptocurrency industry. Kraken, the digital asset exchange, assented to stop its US staking program and also pay the fine of $30M as it seeks to settle charges against it brought by the Securities and Exchange Commission of America. Cryptocurrencies with prices pegged with other stable assets are referred to as stablecoins. They often go for fiat currencies such as the American dollar.

The stablecoins that Paxos issues include Binance USD and Pax Dollar. It is branded by Binance, the largest cryptocurrency exchange in the world. Paxos has not responded to requests for comment by the media. An updated report suggests that Kraken is halting American staking programs, not for the whole world.

The issuer received a provision bank charter in April 2021. Ever since it has been making an effort to secure a charter for a national trust bank. After the publication of these reports, talks have stated that Paxos could be instructed to withdraw the full banking trust charter application.