NY Regulators Investigate Stablecoin Issuer Paxos: Crypto Firms Under Scrutiny

• New York Regulators are investigating stablecoin issuer Paxos due to heightened scrutiny of crypto firms in the US.
• Paxos has denied that the investigation is linked to its application for a full banking charter.
• The NYDFS has declined to comment on the ongoing investigation, but noted that it is continuously monitoring vulnerabilities and risks to consumers.

New York Regulators Investigate Stablecoin Issuer Paxos

The New York Department of Financial Services (NYDFS) has launched an investigation into stablecoin issuer Paxos, amidst heightened scrutiny of crypto firms in the United States. Although the reason for the investigation hasn’t been revealed yet, Paxos Trust Co. has its headquarters in New York and is regulated by the NYDFS.

Paxos Denies Investigation Is Linked To Banking Requests

Paxos received a „BitLicense“ approval from the NYDFS in 2015 and had applied for a national trust bank charter from the U.S Office of Comptroller of Currency (OCC) in April 2021; however, there have been rumors that this could lead to them being asked to withdraw their application for a full banking charter by regulators. Despite these speculations, Paxos clarified: “Paxos has not been asked or denied the charter” and continues working constructively with OCC.

Reason For The Investigation Is Unknown

The reason behind why NYDFS is investigating Paxos remains unknown; however, spokespersons from the agency have declined to comment on any details surrounding it as it is still ongoing. Nevertheless, they noted that they are continually monitoring vulnerabilities and risks posed towards consumers.

Increased Scrutiny Of Crypto Firms In The US

This investigation comes at a time when US regulatory agencies have increased their scrutiny over crypto firms within their borders following Kraken’s settlement for offering unregistered securities and amending its books and records after violating US state laws related to money transmission activities back in 2018-2019 period.

Conclusion

Although limited details on this particular case remain unknown due to ongoing investigations by NYDFS, it serves as an important reminder that regulations surrounding cryptocurrency businesses remain complex throughout different jurisdictions despite advances made in recent years towards more clarity around digital assets laws across states and countries worldwide.