Thursday, February 29, 2024

PayPal Joins Major Round of Investment in Plug-and-Play Crypto Firm Paxos

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Paxos, a New York-based cryptocurrency company, announced a $ 142 million Series C funding round on Thursday, making it one of the largest companies in the fast-growing crypto industry . The new round, which means Paxos has raised more than $ 240 million in total, was led by investment firm Declaration Partners and included contributions from PayPal’s venture arm, among others.

Despite raising a lot of money, Paxos has flown under the radar compared to larger crypto firms like Coinbase. This is largely because the company is focused on providing back-end financial plumbing to other businesses, including Revolut digital bank. In October, PayPal announced that Paxos was help him manage its new consumer Bitcoin offering.

Paxos also stands out because its pedigree is purely Wall Street. While most of the other crypto founders are steeped in Silicon Valley and libertarian culture, Paxos CEO Chad Cascarilla has cut his teeth professionally at Goldman Sachs and Bank of America.

In an interview with FortuneCascarilla said financial infrastructure is a highly regulated area and led him to build Paxos in close cooperation with regulators. He notes that the company has access to the networks of the SWIFT money exchange network and the Federal Reserve, as well as a letter of no action from the SEC to offer various crypto-related products – unusual relationships for a sector often defined by an outlaw. mentality.

Paxos also built a full tech stack that Cascarilla described as a Plug-and-play service. Its core product is a type of cryptocurrency known as stablecoins – a form of digital currency linked to a conventional currency like the US dollar and backed 1 to 1 by a verified reserve pool. Paxos has issued its own exchangeable stablecoin, as well as white label stablecoins offered by several cryptocurrency exchanges.

While many details are obscure, the infrastructure Paxos is building is potentially transformative for areas other than cryptocurrency. These include the stock market where Paxos was granted permission to erase digital versions of stocks – a process that could dramatically improve the speed and efficiency of stock trading. The company also created digital tokens for gold which are linked to actual bullion held in a bank in London.

Other Paxos clients include Credit Suisse and Société Générale.

Cascarilla acknowledges that the work Paxos is doing isn’t particularly sexy, but says Paxos has huge promise as it is a build of a base layer of technology that is gradually being used by giant corporations. and financial institutions. He also says the company is well positioned because its customers do not see it as a potential competitor.

Paxos declined to provide details on his valuation or how much he is making, although Cascarilla noted that the new capital injection will allow him to become profitable in the years to come.

Other investors in Paxos include Mithril Capital, RIT Capital Partners plc, g RRE Ventures and Liberty City Ventures.

More to read absolutely financial cover of Fortune:


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