In a recent blog post, cryptocurrency exchange Binance announced that it would list the PAX/BTC trading pair on Oct. 2 at 10 am (UTC). The Paxos Standard Token (PAX) is a stablecoin that is pegged to the US dollar in 1:1 ratio. Deposits for the token started over a week ago, on Sept. 21. The token guarantees conversion from crypto to fiat within one business day.
Why Is PAX/BTC Listing Important?
PAX is the third stablecoin to make it to the Binance cryptocurrency exchange. Speaking at a conference in Singapore a few days ago, Binance CEO Changpeng Zhao mentioned that stablecoins are critical to the company right now. The exchange reportedly has the largest Tether (USDT) wallet and also has an active TrueUSD (TUSD) market. The addition of PAX makes the exchange’s motives clear — it wants to bring dollar-pegged coins into the system and create more trading opportunities as a prominent fiat–crypto link.
Fiat-pegged coins help investors trade their cryptocurrencies more conveniently and provide a less volatile option. It is one of the safest ways to trade digital currencies with USD without worrying about liquidity. However, they are not free from controversies. Tether has been controversy’s favorite child since its inception with several allegations of market manipulation.
The Paxos Standard Token also courted controversy recently. The centralized crypto token, which is regulated by New York state, comes with an “admin write access” function, which could allow the government to freeze or burn users coins. However, PAX strongly state that:
To be clear: We have no intention of ever giving unrestricted access to our code directly to law enforcement (or anyone else, for that matter). The code is written because we are required to have the capability to freeze or seize tokens ourselves. This is something we don’t take lightly; it’s an action we will take only if required by law.
Is Paxos The Same As Tether?
The crypto community has debated the existence of stablecoins for years. While these coins help users in avoiding the volatility of crypto markets, they also rely extensively on US dollars or the traditional financial system. Tether does the same. A dollar reserve reportedly supports the coins. The same principle is followed by Gemini Dollar (GUSD) and Paxos as well.
Additionally, Paxos and Gemini Dollar are two stablecoins launched by regulated firms in the state of New York. This helps in providing regulatory oversight over the companies operating the coins. In fact, Paxos claims to be the first regulated digital asset of any kind.