Paxos Set to Tokenize Precious Metals

Paxos (PAX), the project behind one of the more influential stablecoins, has given indications of launching a gold-backed digital asset by the end of 2019. In an interview with Fortune, the project’s CEO Charles Cascarilla, the company outlined the plans for the development of the Paxos project.

Paxos wants to take “any type of asset” and put it on the blockchain, in essence making the project capable of launching a new batch of security tokens. But physical gold will probably be the first asset added.

Paxos is one of the few fully legalized digital asset projects, with complete transparency, complying with the state of New York’s laws. The PAX token is backed by cash in a bank, thus achieving a peg to the dollar.

Charles Cascarilla, Paxos CEO

PAX quickly spread to multiple markets and trading pairs, and became the leader among newly-minted stablecoins. Even in a market dominated by Tether (USDT), the PAX asset managed to stand ahead in terms of market share compared to other stablecoins. PAX has a share of 0.74% of all trades, based on Stablecoinswar data.

The exact manner of launching the tokens is uncertain, but the principle of ensuring the company holds the actual reserves applies:

“How you do it with a gold token is how much gold you have in a vault equals how many gold tokens outstanding. How do you do it with stocks? How many stocks do I have sitting in an account, equals how many stocks in the blockchain,” Cascarilla said.

Paxos already has an account with the biggest holder of securities, the US Depository Trust Company, thus already having the mechanism to store traditional financial instruments. For now, attempts to tokenize securities has been small-scale, and usually related to the stocks of a single company.

Stablecoins are a private case of tokenized securities, with increasing importance on the digital asset markets. The potential for unlimited, borderless transfers of funds using stablecoins allows for exchange arbitrage and easier digital asset trades. PAX is also used for cashing out, although still requiring verification.