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Paxos Integrates with Arbitrum, Expanding Tokenization on Ethereum Layer 2

AuthorRaymond Munene
Crypto News Author
Fact Checked by Joshua Downes
Last updated: September 10, 2024
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Paxos Integrates with Arbitrum, Expanding Tokenization on Ethereum Layer 2

Highlights:

  • Paxos integrates with Arbitrum, marking its first venture into Ethereum’s Layer 2 network for on-chain asset adoption.
  • Arbitrum’s speed and scalability make it a key partner for Paxos as it expands its regulated tokenization platform.
  • The partnership aims to drive institutional adoption by leveraging Arbitrum’s deep liquidity and robust DeFi ecosystem.

Paxos, a regulated blockchain infrastructure and tokenization platform, has announced its expansion into the Ethereum Layer 2 network, Arbitrum. This move marks a significant milestone as Arbitrum becomes the first Layer 2 network to integrate with Paxos. The collaboration aims to enhance the adoption of on-chain real-world assets, leveraging Arbitrum’s scalability, speed, and cost-efficiency.

The Arbitrum Foundation highlighted the importance of this integration, noting that Paxos will now tap into Ethereum’s deep liquidity while engaging with Arbitrum’s thriving decentralized finance (DeFi) ecosystem. This partnership will facilitate further institutional adoption of blockchain technology.

Moreover, it will enable enterprises to launch innovative financial products and services more easily. Luke Xiao, Fintech Partnership Lead at Offchain Labs, expressed enthusiasm about the partnership.

He stated:

“We are excited that Paxos has decided to bring their stablecoin issuance and regulated tokenization platform to Arbitrum. Arbitrum’s high-performance network and robust ecosystem make it a natural home for Paxos’ tokenization platform. We’re excited to see the transformative impact this will have on DeFi and the broader Arbitrum ecosystem.”

Paxos Expands Institutional Reach

Paxos has built a reputation for its compliance-first approach, ensuring that its offerings align with financial regulations in all regions of operation. The integration with Arbitrum underscores Paxos’ commitment to expanding its presence in the Ethereum ecosystem while offering a more scalable and efficient network for its users.

Walter Hessert, Head of Strategy at Paxos, commented:

“We are excited to partner with Arbitrum to bring more real-world assets on-chain. Arbitrum’s speed, security, and scalability are essential for promoting the widespread use of digital assets in various sectors. Over the next three years, stablecoins are expected to see significant adoption among both retail and institutional users, with Paxos leading this transformation.”

This integration is expected to significantly boost the utility and accessibility of digital assets for enterprises and institutions. By leveraging Arbitrum’s network, Paxos aims to offer faster transactions and reduced costs. In addition, this is crucial for institutions seeking to adopt blockchain technology.

SEC Ends Paxos BUSD Investigation with No Charges

Recently, the U.S. Securities and Exchange Commission (SEC) concluded its investigation into Paxos Trust Company regarding its Binance USD (BUSD) stablecoin. The SEC decided not to pursue any enforcement action against Paxos, marking a significant moment for the company and the broader stablecoin market.

Paxos had been under scrutiny since February 2023 when the SEC issued a Wells notice, suggesting potential charges related to BUSD as an unregistered security. However, the SEC’s decision to drop the case comes shortly after a federal court ruling in favor of Binance. The court asserted that BUSD sales were not a securities offering.

This outcome provides much-needed regulatory clarity for Paxos and the entire stablecoin sector. Paxos’ head of strategy, Walter Hessert, expressed relief over the resolution. He emphasized that their stablecoins are fully backed by U.S. dollar reserves, ensuring the safety of customer assets.

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