ALBANY, N.Y.–The New York Department of Financial Services has approved a gold-backed cryptocurrency to begin operating. The startup behind the initiative is also offering loans.
Paxos, a New York-based exchange and stablecoin issuer, has launched the gold-backed crypto asset called Pax Gold, with each Ethereum-based token encapsulating the legal title to a physical bar of gold stored in the Brink’s London vault, according to the company.
The objective is to appeal to those desire some type of hard asset to backstop their cryptocurrency.
“It’s not a representation of the commodity, it’s actual legal title to it,” Paxos CEO Chad Cascarilla told CoinDesk. “This is the exact point of the blockchain, the exact premise, that you can now make [assets] easily moveable and divisible and not be tied to a manual, physical process.”
How it Works
According to CoinDesk, each token costs the same as an ounce of gold and can be redeemed for a physical bar at partnering institutions such as Bullion Exchanges in New York. Cascarilla told the publication Paxos will expand its list of global partners from the traditional commodities industry to ensure users can claim real gold even if they’re not in London or New York. Plus, the crypto loan startup SALT now offers PAXG-backed loans as well, available in fiat or stablecoins such as PAX, TrueUSD or USDC, CoinDesk reported.
“We’re going to do more products like this where we are taking real-world assets and putting them on the blockchain,” Cascarilla was quoted as saying.