Stablecoin provider Paxos has purportedly gained regulatory endorsement from the New York Department of Financial Services (DFS) to introduce its product on the Solana blockchain, marking a notable expansion beyond its prior authorization limited to the Ethereum network due to DFS constraints. The anticipated launch date for Pax Dollar (USDP) on Solana is January 17, 2024.
Pax Dollar, a stablecoin backed 1:1 by the U.S. dollar, had been exclusively authorized for issuance on Ethereum until now.
Walter Hessert, Paxos' head of strategy, revealed that after a comprehensive assessment, Paxos encountered no objections to broadening the distribution of USDP from Ethereum to Solana following an extensive review process by DFS. The scrutiny focused on evaluating the internal risk framework of the Solana network. Hessert underscored Paxos' standing as "the most highly regulated stablecoin issuer globally," drawing a contrast with competitors such as Tether and USDC, which lack DFS regulation. He emphasized Paxos as the sole entity issuing regulated stablecoins at a significant scale.
Highlighting Solana's swifter transaction speeds and reduced fees compared to Ethereum, Hessert suggested that these attributes might render Solana an attractive choice for Paxos' partners. He hinted at the possibility of PayPal extending its stablecoin, PayPal USD, to the Solana blockchain.
Solana, recognized for its layer 1 protocol offering high transaction speeds and economical transactions, boasts a capacity of around 50,000 to 65,000 transactions per second (TPS), a significant leap from Ethereum's approximate capacity of 30 TPS. Despite encountering multiple interruptions in 2022, Solana has maintained uninterrupted service in recent months.
Paxos, according to Hessert, is actively seeking regulatory approval to operate on other layer-1 and layer-2 blockchains. Concurrently, the company has been steadily expanding its global presence. Paxos recently disclosed preliminary approval from Singapore regulators for establishing a new entity aimed at launching a U.S. dollar-backed stablecoin. Additionally, they received approval from Abu Dhabi regulators to issue stablecoins and offer digital asset services in the emirate.
