New York Approves Paxos Blockchain, Genesis BitLicense (1)

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By Lydia Beyoud

The New York Department of Financial Services has authorized Paxos Trust Co. LLC to launch a blockchain platform to streamline the post-trade settlement process for precious metals, the regulator announced May 17.

Paxos founder and CEO Chad Cascarilla told Bloomberg Law the Bankchain product, a proprietary, tokenless blockchain platform, is intended to solve the problem of settlement risk.

“It really does exist very profoundly in the commodities space. There really hasn’t been a good way to move the asset and move the payment at the exact same moment and to be able to do it without having to rely on a central intermediary,” Cascarilla said.

Paxos’s blockchain settlement platform is close to launching with nearly 20 counterparties integrated into the system, he said.

While initial plans are to use Bankchain for precious metals settlements, Cascarilla said they also hope to expand its use to the broader commodities, energy and potentially foreign exchange markets.

Paxos’s predecessor company, itBit, was the first virtual currency company to receive a charter from the NYDFS in 2015. Established as a trust company, Paxos needed the regulator’s approval to expand its charter to launch Bankchain, Cascarilla said.

BitLicense No. 5

The NYDFS also added to its roster of licensed cryptocurrency trading platforms, according to the May 17 announcement. The department granted a virtual currency license to Genesis Global Trading, Inc., which trades several of the major virtual currency tokens.

With Genesis’s addition, the NYDFS has now issued five virtual currency licenses, as well as two virtual currency charters.

Genesis has been operating under a provisional safe-harbor while its BitLicense application was pending. The broker-dealer’s platform allows for trading of some of the most popular virtual currencies and tokens, including Bitcoin, Ethereum, Ripple, Litecoin and Zcash.

“Today’s decision is an important step forward and reaffirms the robust compliance measures we have enacted as an established trading partner,” Genesis CEO Michael Moro said in a statement.

Polarizing Regulator

Financial Services Superintendent Maria Vullo touted her agency’s role in helping grow the fintech industry.

“These approvals demonstrate DFS’s commitment to protecting consumers and the virtual currency market while encouraging innovation, such as the expanded use of blockchain, and providing strong regulatory oversight to new and existing market participants,” Vullo said in the statement.

The NYDFS and its BitLicense process have been criticized by some members of the cryptocurrency community as being overly burdensome and demanding.

While some exchanges have ceased operations in the state entirely, others continue to pursue the New York market.

For Paxos, NYDFS’s regulatory oversight is an important aspect of growing the industry.

“Our view point has always been that if you really want to get broader adoption, get institutional adoption, you want to be able to create a way for this to become part of a broader network, you need to have regulation put into place, especially when you’re holding other people’s assets and money,” Cascarilla said.

To contact the reporter on this story: Lydia Beyoud in Washington at

To contact the editor responsible for this story: Michael Ferullo at

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