New York Authorized Paxos to Offer PAX Gold and Binance USD

The New York State Department of Financial Services authorized Paxos Trust Company on September 5, 2019 to offer PAX Gold, the first gold-backed virtual currency approved by the department, and Binance USD, a stablecoin pegged to the U.S. dollar.

The decision mattered because it applied New York’s regulated trust-company framework to two different forms of asset tokenization. PAX Gold connected an Ethereum token to specifically allocated physical gold, while BUSD placed the brand and distribution reach of cryptocurrency exchange Binance behind a dollar-linked token issued and custodied by Paxos. The approvals did not constitute a general endorsement of stablecoins, Binance, Ethereum or tokenized commodities.

What New York authorized

DFS said Paxos was already operating under a limited-purpose trust-company charter issued in May 2015, when the company was known as itBit Trust Company. The department had authorized Paxos Standard, its first dollar-backed token, in September 2018. The September 5 action brought the number of asset-backed tokens issued by Paxos and authorized by DFS to three: Paxos Standard, PAX Gold and BUSD.

The regulator said it imposed conditions addressing issuance risks and applied its standards for anti-money-laundering controls, fraud prevention, consumer protection and cybersecurity. The public announcement did not reproduce every operative condition or establish that regulatory supervision eliminated reserve, custody, liquidity, technology or counterparty risk.

Gold ownership represented on Ethereum

Paxos launched PAX Gold on September 5 as an ERC-20 token. The company stated that each token represented one fine troy ounce of gold from a London Good Delivery bar held in Brink’s vaults, with ownership allocated to a specific bar and divisible to 18 decimal places. Paxos also said Withum would perform monthly examinations comparing token supply with fine troy ounces held in custody.

Those product descriptions were claims made by the issuer at launch. DFS independently verified the authorization and its regulatory oversight, but the event-day public record did not include a completed monthly examination, secondary-market liquidity history or operating record for the new token. Tokenization could make fractional transfers easier without removing reliance on Paxos, its vaulting arrangements, Ethereum and participating trading venues.

Binance gained a regulated dollar token

BUSD was jointly developed by Binance and Paxos, but Paxos was designated as the dollar custodian and token issuer. Their September 5 announcement said the token would become available later in September for direct purchase and redemption through Paxos at one BUSD for one U.S. dollar. Binance planned initial trading pairs against bitcoin, BNB and XRP.

That chronology is important: September 5 marked authorization and announcement, not the start of BUSD trading. No event-day supply, redemption volume or trading price existed to evaluate. The one-to-one ratio described the intended issuance and redemption mechanism rather than a guarantee that every secondary market would always quote exactly one dollar.

The stablecoin market context

CoinMarketCap’s historical snapshot for September 5 listed Tether at approximately $4.04 billion in market capitalization and $16.12 billion in reported 24-hour volume. The same snapshot listed bitcoin’s reported 24-hour volume at $14.55 billion. These figures illustrate how a dollar-linked token could function as heavily used market infrastructure even when its capitalization was much smaller than bitcoin’s.

The comparison has material limitations. CoinMarketCap’s page is a cross-market historical snapshot, not an audited consolidated tape; the visible record does not identify a precise intraday cutoff or resolve exchange reporting quality, duplication or wash trading. It cannot show that the New York approvals caused any market movement.

As of September 5, the institutional significance was therefore structural rather than quantitative. A supervised trust company had received permission to issue both a token representing allocated gold and a Binance-branded dollar token. Adoption, reserve performance, redemption reliability and secondary-market depth remained untested.