New York Department of Financial Services Approves Gemini and Paxos Virtual Currency “Stablecoins”
September 12, 2018
This week, the New York Department of Financial Services announced approval for its two licensed FinTech-oriented state trust companies, Gemini Trust Company LLC and Paxos Trust Company LLC (formerly known as itBit Trust Company), to offer a new type of cryptocurrency referred to as a Stablecoin.
The Gemini Dollar and Paxos Standard Token are designed to be collateralized one-for-one by the U.S. dollar, and will permit payment for other assets traded on blockchains with instant settlement and minimal transaction costs. As described, GUSD and PAX are issued only when a customer of Gemini or Paxos deposits a corresponding amount of U.S. dollars, which are always held in a reserve account by the issuer on behalf of GUSD and PAX holders. At all times under this framework, Gemini or Paxos are required to hold, in a fiduciary capacity, at least as much fiat currency as GUSD and PAX in circulation.
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