Paxos, a major player in the stablecoin market, has secured regulatory approval from the New York Department of Financial Services (DFS) to expand its stablecoin offerings to the Solana blockchain, according to a Dec. 22 Fortune report.
This marks a significant development, as Paxos was previously limited to issuing its Pax Dollar (USDP) stablecoin exclusively on the Ethereum network.
Solana expansion
Solana’s blockchain technology offers significant advantages over Ethereum, which has been the sole blockchain for Paxos’s stablecoin issuance.
Solana is known for its high transaction throughput, and the network can handle around 50,000 to 65,000 transactions per second (TPS) — vastly exceeding Ethereum’s capacity of about 30 TPS. This capability could offer Paxos’s partners and clients more efficiency and lower costs.
The expansion to Solana is scheduled for Jan. 17, 2024. The approval followed an extensive review by the DFS, focusing on Solana’s internal risk framework.
Walter Hessert, Paxos’s Head of Strategy, said the expansion, aided by Solana’s ease of use and cost-effective ecosystem, has the potential to help stablecoins become more integrated into everyday consumer transactions.
Regulated expansion efforts
A key aspect of Paxos’s expansion strategy is its focus on regulatory compliance. The company has been a proponent of working within regulatory frameworks, which is evident in its efforts to secure approval from the New York DFS for its expansion plans.
This compliance is a distinguishing feature in the stablecoin market, setting Paxos apart from other issuers that may not be as closely regulated. Hessert emphasized this point, saying:
“We are the only company that has been issuing regulated stablecoins at scale — period.”
Paxos’s venture into the Solana blockchain is part of a broader strategy to explore regulatory approvals for other blockchain networks. The company has been actively expanding its international presence.
This includes recent progress in international markets, with preliminary approval for a new U.S. dollar-backed stablecoin entity in Singapore and regulatory approval from Abu Dhabi for issuing stablecoins and digital asset services.
