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New York State Department of Financial Services approves first gold-backed virtual currency

New York State Department of Financial Services (DFS) has authorised Paxos Trust Company to offer a gold-backed virtual currency, the first such virtual currency authorized by DFS, as well as BUSD, a virtual currency pegged to the US dollar.

“DFS is committed to encouraging innovation while providing regulatory oversight to keep New Yorkers and the rapidly evolving financial services market safe and sound,” said Lacewell. “These approvals reflect DFS’ leadership in the virtual currency arena and our priority to protect consumers in every decision we make.”

DFS issued a limited purpose trust company charter in May 2015 to Paxos Trust Company, formerly known as itBit Trust Company, which operates the itBit Exchange, to offer services for buying, selling, sending, receiving, and storing virtual currency. In September 2018, Paxos was authorised by DFS to offer its first asset-backed token - commonly known as a stablecoin - pegged to the US dollar, Paxos Standard.

DFS has now authorised Paxos to offer PAX Gold, an asset-backed token that is pegged to gold.  In addition, DFS has also now authorised Paxos to offer BUSD, an asset-backed token that is pegged to the US dollar. In total, DFS has approved three asset-backed tokens issued by Paxos: Paxos Standard (PAX), PAX Gold (PAXG), and BUSD.

As part of the approval of both products, DFS has established required conditions to ensure that potential risks associated with the issuance and offering of PAX Gold and BUSD have been adequately addressed, and DFS has applied New York’s standards regarding anti-money laundering, anti-fraud, and consumer protection, and cyber security measures.

DFS became the first state or federal agency in the United States to supervise virtual currency with the promulgation of its landmark regulation in 2015. DFS, which remains committed to supervising and promoting financial services market innovations, licences virtual currency companies, technology-driven money services businesses, and online lenders operating in New York.

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