Paxos raises US$300m for blockchain infrastructure platform
Labeling itself as the first platform of its kind, ’ vision is to create the foundation for a “new, open financial system” capable of operating faster, more efficiently, and with greater inclusivity on a global scale.
It is achieving this through a combination of turnkey APIs, regulated token asset exchanges, and blockchain-based settlements for institutions.
Officially launched in 2012, Paxos was the first to secure a New York State Department of Financial Services Trust Charter for Digital Assets, the first to launch a regulated stablecoin (PAX), the first to gain SEC permission to use blockchain in the settlement of stock trades, and many more industry records.
One of the world’s fastest-growing fintechs
The Series D round brings Paxos’ total capital raised to $500m and raises its value to $2.4bn, placing it among the fastest-growing fintechs in the world. The round was led by with participation from PayPal Ventures, Mithril Capital, WestCap, and others.
“Demand for our enterprise solutions has accelerated much faster than we could have anticipated,” Charles Cascarilla, CEO and Co-Founder. “It validates our approach to providing the most innovative and regulated enterprise solutions to replatform the financial system and create the digital economy of the future.”
To bear this out, Paxos achieved the following milestones in 2021 alone:
- Tokenised 100,000 oz of investment-grade gold with PAX Gold
- Grew stablecoin assets to almost $10bn
- Provided support for the launch of crypto transactions on Venmo in partnership with Paypal
Innovation by embracing regulation
Notably, Paxos has become successful by innovating close to regulatory lines, something not lost on Patricia Kemp, Co-Founder and Managing Partner at Oak HC/FT.
“Its solutions are designed to ensure trust with enterprise clients while enabling exciting new business opportunities.
“Few companies are approaching digital assets with such a clear vision as to how blockchain technology can revolutionise the transfer and creation of value. We’re excited to support Paxos at this pivotal time in the evolution of the global financial system,” she said.
As blockchain continues to be by the payments industry, whether in terms of optimisation or disruption, it seems clear that blockchain is poised to become the fundamental architecture of finance. Paxos, as a nexus for its development, may be able to realise its vision a lot sooner than previously imagined.
Image source: Paxos
Bank of Israel releases a draft model for potential CBDC
The Bank of Israel (BoL) explained that it has been exploring the concept since 2017. However, while it has a head start on others in this regard (see: the Bank of England), the bank has yet to decide whether issuance of a CBDC would be advantageous.
As is the general philosophy with CBDCs, the proposed ‘digital shekel’ would co-exist with other extant forms of currency currently used in Israel. The value proposition, as mapped out by the BoL’s Steering Committee, is as follows:
- An efficient and secure method of alternative payment in the digital economy
- The adoption of next-gen technology to bolster the country’s financial future
- Bolstering payment infrastructure during “emergencies or breakdowns”
- Laying an inexpensive foundation for cross-border payments
- Enabling the use of secure digital payment platforms
- Reduce the overall use of cash to combat the “shadow economy”
Are CBDCs worth it?
While the general hesitance of most global central banks to adopt an official digital currency indicates that it is a concept still considered a ‘novelty’, the BoL’s analysis of CBDCs puts forward a strong case for their exploration.
Notably, their use in reducing crime, promoting financial inclusion, and expanding elements of the digital economy could help resolve ongoing economic issues.
However, the BoL is also conscious that “some if not all of these benefits may be obtainable through the improvement and upgrading of the existing payment systems.” And yet, if the purpose of central banks is to facilitate the ease of transactions between people, is it sensible to eschew the development of a trend gaining momentum globally?
Whatever the case, placing a CBDC is far from an easy task. Sweden’s Riksbank recently published a report of its progress with the ‘e-krona’. Originally anticipated to be trialled in 2018, the bank’s next estimate for roll-out is the latter part of 2026.
“Simply introducing a complement to cash for retail transactions may not make much of a difference in the economy. Using wholesale CBDCs in cross-border transactions has the potential to raise efficiency,” said Johanna Jeansson, Economist at Bloomberg.
“Employing new digital tools for policy purposes could really alter the macroeconomic playing field. The bigger the step, the more thought it’s likely to require. Expect that to take time.”