Investors would soon be able to trade gold and stock tied to cryptocurrency according to Paxos, a New York-based firm. It is planning to link its cryptocurrency to commodities such as gold and Stock using Blockchain features to make these assets accessible to crypto investors.
Paxos Standard (PAX) recently launched a dollar-backed stablecoin which got green-light from the New York Department of Financial Service (NYDFS).
There are indications that the company is into custodial services also, enabling it to extend its services to bigger corporations which may have misgivings over the safety of crypto assets.
In an interview with Fortune, the firm’s co-founder and CEO, Chad Cascarilla spoke about the possibility to launch a new cryptocurrency tied to Gold and Stock.
How it Will Work
According to Paxos CEO, Chad Cascarilla they will simply make sure that the firm holds as much gold in their vault as circulating cryptocurrency investment.
This is not very different with how it operates its stablecoin backed by USD. Paxos intends to improve and scale the method to accomplish its purpose.
Cascarilla said that Paxos is the only crypto-related company that has an account at the Depository Trust Company. This means that the firm has been dealing with stocks. So it can bring this market to Blockchain, even though analysts do not expect this to be a simple process.
The company has authorization from the Securities and Exchange Commission (SEC) which gives it some leverage considering that the commission has held sway in the quest to regulate the volatile crypto market and activities in the industry.
Based in New York, it is doubtful that Paxos would simply get a go-ahead for its planned placement of stocks on the blockchain. They will likely need additional approval to proceed with the project.
Some Challenges Ahead
The idea of pegging cryptocurrencies to commodities is not new. Tether implemented its platform with such system, but the platform has been controversial.
Quests such as Paxos’ seem to suck cryptocurrencies into centralization since approval from central authorities with consequent monitoring is essential to the success of the proposal.
The advantage however is that institutional investors are more comfortable with regulated investments and would willingly embrace the concept.