An insider from PayPal says the firm’s new stablecoin, PYUSD, will ultimately launch on decentralized finance (DeFI) platforms sometime in the future. In a new interview on the Unchained Podcast, Jose Fernandez da Ponte, PayPal’s senior vice president of blockchain, crypto and digital currencies, tells host Laura Shin that the firm intends for PYUSD, which […]
The post PayPal Executive Says PYUSD Will Be Made Available for DeFi in the Future appeared first on The Daily Hodl.
Tether CTO Paolo Ardoino says that PayPal’s newly launched stablecoin PYUSD could hurt USDT‘s US competition. In a new interview with Benzinga, Ardoino says that he doesn’t view PYUSD as competition for Tether, but rather, he views it as a challenge for competitors like Circle’s USD Coin (USDC). According to Ardoino, PYUSD may be a […]
The post Tether CTO Says PayPal’s PYUSD Could Erode USDT’s Competition in America: Report appeared first on The Daily Hodl.
The move provides PAX coin access to Mexico’s 3.1 million-plus cryptocurrency users.
Blockchain fintech company Paxos and online marketplace MercadoLibre have entered a partnership to bring the Pax Dollar (USDP) stablecoin to Mexico via the MercadoPago payment service on June 28.
According to a press release shared with Cointelegraph, USDP will be available to all MercadoPago customers throughout Mexico. While the company is based in the United States — with offices in New York, London and Singapore — more than 60% of its active wallets support customers throughout Latin America.
Mexico currently boasts a 9.3% penetration rate for cryptocurrency use, with more than 12 million users, per a report from Statista. By 2027, analysts estimate more than 20 million people in Mexico will hold crypto, bringing the total penetration to 14.6%.
The introduction of USDP to the MercadoPago payment ecosystem adds stablecoin access to the service’s options in Mexico, a feature that could provide much-needed relief from extraneous fees related to remittances for a significant number of users.
While Venezuela may lead the way in cryptocurrency adoption among Latin American nations, Mexico ranks highest in total number of transactions. This is largely due to the number of remittances, with only India receiving more.
Related: Why crypto remittance companies are flocking to Mexico
Paxos is well known in fintech through its various dealings, including a partnership with PayPal, and its noteworthiness as the first blockchain company to receive approval from the U.S. Securities and Exchange Commission (SEC) to settle U.S.-listed securities.
In February 2023, however, Paxos received a Wells notice indicating that its Binance-based stablecoin, Binance USD (BUSD), would be labeled a security and, as such, should have been registered.
As Cointelegraph reported in February, the cryptocurrency community was baffled by the notice, and Paxos issued a statement vehemently disagreeing with the SEC’s notion that BUSD should be classified as a security.
In other Paxos news, recently launched cryptocurrency exchange EDX has decided to switch custody providers. The exchange will drop its current partner, Paxos, and instead tap Anchorage Digital. According to a Paxos spokesperson, EDX made the change in order to facilitate a shift toward a noncustodial offering at launch.
The new exchange does not custody customer funds itself to avoid a conflict of interest — and a hot-button issue with the SEC.
EDX, a cryptocurrency exchange launched a week ago with the backing of traditional finance heavyweights such as Citadel Securities, Fidelity Digital Assets and Charles Schwab, is reportedly preparing to switch custody providers, dropping Paxos Trust in favor of Anchorage Digital. EDX has a noncustodial business model designed to remove conflicts of interest.
EDX supports trading in four cryptocurrencies — Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). At the time of writing, BCH had risen 70.43% in the week since EDX began operating and 101.36% in the last month.
EDX announced its partnership with Paxos to “facilitate the custody and wallet infrastructure of digital assets” in October, shortly after the launch of the exchange was announced. The United States Securities and Exchange Commission has since announced a proposal for stricter custody rules for crypto firms. A Paxos spokesperson told Cointelegraph:
“EDX shifted to focus on a non-custodial offering at launch. We are very excited about what EDX is building, and we hope to support EDX customers with our regulated custody when banks and brokers onboard to the platform.”
Blockchain infrastructure platform Paxos holds a so-called BitLicense from the New York Department of Financial Services. That agency was reported to be investigating Paxos earlier this year for an unspecified reason. Paxos was granted “preliminary conditional approval” for a U.S. bank charter from the United States Comptroller of the Currency (OCC) in 2021, but that approval reportedly expired at the end of March.
Related: Prometheum subsidiary receives FINRA approval for digital asset qualified custody
Anchorage Digital was the first crypto firm to receive a national trust bank charter from the OCC in January 2021. It ran afoul of that regulator a year later for Anti-Money Laundering deficiencies and agreed to a consent order. Shortly after that, Anchorage Digital formed a custody network with crypto exchanges Binance.US, CoinList, Blockchain.com, Strix Leviathan and Wintermute.
1/ EDX Markets, a non-custodial exchange, went live today.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) June 20, 2023
That sounds like a contradiction right?
Here's background on EDX and initial thoughts. pic.twitter.com/cPqARF5BmG
EDX plans to introduce EDX Clearing, a clearinghouse to settle trades executed on the EDX Markets platform, later this year. EDX declined to comment on the matter of its custody provider, and Anchorage Digital did not respond to a request for comment.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
After a dip of over $1 billion in the past 30 days, BUSD now sits at the fourth position in market capitalization among stablecoins.
The dollar-pegged Binance USD (BUSD) stablecoin sits now at the fourth position in market capitalization among other stablecoins following a dip of over $1 billion in the past 30 days, data from CoinMarketCap shows.
As of writing, BUSD market cap stands at $4.30 billion, down 29% from $5.54 billion on May 18. The stablecoin has been in a downward trend since December last year, when its market cap topped $23 billion.
The decline in BUSD market cap parallels major developments surrounding Binance following FTX's dramatic collapse in November 2022. Last December, a report indicating Binance would be targeted by the U.S. Department of Justice led to net withdrawals of $3.6 billion within seven days. The exchange saw large BUSD redemptions from market makers, including more than $245 million from Jump Finance.
A partnership between Binance and Paxos Trust created the BUSD stablecoin in September 2019. Paxos issues and owns the product, while Binance licenses its brand. For Paxos, the partnership brought new challenges. In February, the company was reportedly served a Wells Notice from the U.S. Securities and Exchange Commission alleging that Binance USD was an unregistered security.
Related: Stablecoins 101 - What are crypto stablecoins, and how do they work?
The investigation led the New York Department of Financial Services (NYDFS) to order Paxos to stop the issuance of BUSD. Together, these episodes took a significant bite out of BUSD's market share, from $15.88 billion on February 12 to $8.38 billion on March 13.
The most recent blow came from the SEC lawsuit against Binance on June 5 for allegedly offering unregistered securities. The U.S. regulator pressed 13 charges against the exchange, including unregistered offers and sales of the BNB and BUSD tokens.
The market dominance of stablecoins pegged to the U.S. dollar has undergone some changes over the past year, with Tether (USDT) climbing back to its all-time high, while most stablecoins are declining.
Circle’s USD Coin (USDC) saw its market share decline from 34.88% in May 2022 to 23.05% in May 2023. Market participation of BUSD plunged from 11.68% to 4.18% in the same period, while Dai’s (DAI) share of the crypto market was at 3.66%, down from 4.05% in May 2022.
Tether's USDT, on the other hand, is gaining traction. The stablecoin’s market dominance stood at 65.89% in May, up from 47.04% a year ago. Its market capitalization has risen to $83.1 billion, while USDC’s market cap has dropped from a peak of $55 billion to $29 billion.
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?
Statistics recorded on April 15, 2023, show that the number of coins in circulation for the stablecoin BUSD dropped below the 7 billion range to 6.68 billion, marking the lowest number of BUSD in circulation since April 2021. Furthermore, data indicates that the supply of BUSD has shrunk by 19.8% over the past 30 days. […]
“We need more transparency over the reserves of these stablecoins, which I think we’re going to see,” Clara Medalie said.
Blockchain infrastructure provider Paxos has recently published a report, that aims at helping the community look beyond the crypto winter and understand how to respond to the current market conditions.
Inside the 20 pages of the Paxos Crypto Winter Report 2023, the infrastructure provider identified several key opportunities for projects during the crypto winter. This includes seeking solutions and finding potential partnerships for their projects.
Within the report, Clara Medalie, the director of research at the digital asset data provider Kaiko, said that solutions like stablecoins remain one of the crypto use cases that have "consistently proven itself over time.” Medalie said that stablecoins have been very useful for the entire industry.
Despite being one of the use cases that proved itself, stablecoins still have room for improvement. “We need more transparency over the reserves of these stablecoins, which I think we’re going to see,” Medalie added.
Apart from solutions like stablecoins, the report also highlighted that those who view the crypto winter as a "season for bridge-building" will come out ahead of the others. According to the report, it’s important to partner with those who are building businesses that implement technologies that aim to meet the “real-world needs of the financial sector.”
Related: Paxos set to withdraw from Canada amid regulatory uncertainty
Meanwhile, the United States regulating stablecoins may be a necessary step to keep the dollar strong according to Denelle Dixon, the CEO and executive director of the Stellar Development Foundation. Dixon recently said that if they want a strong dollar globally, a USD stablecoin is the "way to see that happen."
On the other hand, the Bank of International Settlements (BIS) recently said in a working paper that stablecoins are a less preferable form of tokenized money. The report likened stablecoins to bearer instruments which were prevalent during the era of "free banking" in the United States.
Magazine: Get your money back: The weird world of crypto litigation
Paxos assured its customers that their funds would "remain safely" in their accounts, but advised users to withdraw all balances from their accounts at their earliest convenience.
Paxos, a fintech company that offers blockchain-based solutions for the global financial industry, has announced its decision to withdraw from the Canadian Market.
The company released a statement on its website informing customers that they will no longer be able to transact from their Paxos accounts starting from June 2nd, except for withdrawing their funds. The move comes as Paxos continues to assess “its readiness to re-enter the Canadian market in cooperation with the Ontario Securities Commission (OSC) at a future date.”
The announcement also stated that customers' funds would "remain safely" in their accounts and will be reflected on their account balance, protected by Paxos' terms and conditions. However, the company has urged customers to withdraw all balances from their accounts at their "earliest convenience." Customers who don't have any funds in their accounts will have their accounts automatically closed on May 9.
On the other hand, customers who maintain a balance in their Paxos account will still be able to access and withdraw their funds after June 2. However, they will not have full access to Paxos' platform to initiate new trades. Paxos has advised customers to wire their fiat balances to bank accounts linked to their "itBit account" that is under their name, or transfer digital assets held in their accounts to external wallets.
Related: New Canadian rules for crypto trading platforms leave little room for stablecoins
Paxos' decision to exit the Canadian market comes at a time when Canada has been tightening its regulations on cryptocurrency platforms in recent months. On February 22, the Canadian Securities Administrators (CSA) released a notice that mandates crypto exchanges to enter into new legally binding agreements as they wait for registration with the regulatory body. The updated undertaking includes a clause that forbids buying or depositing Value Referenced Crypto Assets, or stablecoins, via crypto contracts without written authorization from the CSA.
Paxos is not the only company to exit the Canadian market in recent months. On March 20, cryptocurrency exchange OKX informed Canadian users via email that the firm “will no longer provide services or allow users to open new accounts in Canada starting on Mar. 24, 2023, 12:00 AM EST,” citing “new regulations.”
On April 7, cryptocurrency derivatives exchange dYdX announced plans to end services in Canada, starting with halting the onboarding of new users located in the country. On April 14, the exchange will move all existing Canadian users to “close-only mode,” allowing them to only withdraw funds.
The recent exits depicts a growing trend of companies exiting Canada due to regulatory concerns.
Tether supply across cryptocurrency exchanges has dropped 28% in 2023, however, hinting at an overall decline in demand for stablecoins.
Tether (USDT) continues to benefit from the ongoing turmoil in the U.S. dollar-backed stablecoin industry with its market capitalization growing significantly in Q1 2023 at other stablecoins' expense.
On April 6, the circulating market cap of USDT surpassed $80 billion for the first time since May 2022 with a gain of $15 billion so far in 2023.
On the other hand, the market caps of its chief rivals, namely USD Coin (USDC) and Binance USD (BUSD), fell by about $12 billion and $9.4 billion, respectively.
Crypto traders opted for Tether given the growing concerns around USD Coin and Binance USD.
Notably, USDC market capitalization slipped due to its $3.3 billion exposure to the now-collapsed Silicon Valley and Silvergate banks. While BUSD suffered after New York regulators ordered Paxos to shut down the stablecon's issuance.
USDC weathered the crisis after the Federal Deposit Insurance Corporation's assurance that they would make depositors at the insolvent banks whole. As a result, the stablecoin recovered its dollar peg after losing it at the peak of the banking crisis in mid March.
But a growing crypto crackdown in the U.S. has prompted investors to maintain distance from regional firms. For instance, Paxos confirmed that the Securities and Exchange Commission (SEC) treats BUSD as an unregistered security.
On the other hand, Tether is a non-U.S. firm and has repeatedly assured that it has no exposure to insolvent U.S. banks. Nonetheless, it keeps facing constant scrutiny over its reserve assets and lack of proper audits for years, despite such issues becoming less of a concern among traders.
Interestingly, the growth in the USDT circulating supply has coincided with a drop in its supply across exchanges.
Related: USDT issuer Tether has up to $1.7B in excess reserves, CTO says
Tether's balance on exchanges has dropped 28% YTD to 12.88 billion USDT, according to Glassnode. In comparison, the aggregated stablecoin balance across exchanges has dropped by 41% YTD to $22.31 billion.
The decline in stablecoin reserves coincides with a crypto market rally, suggesting that traders have been converting their crypto dollars to buy Bitcoin (BTC) and Ether (ETH).
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
On Monday, Binance CEO Changpeng Zhao, also known as CZ, announced that the company had decided to convert $1 billion worth of BUSD from the Industry Recovery Initiative fund into three different cryptocurrencies. Zhao noted that significant onchain movements would be noticeable following the announcement. CZ’s Decision to Convert $1 Billion BUSD Comes Amidst Troubles […]