- Issued by Paxos, PAX Gold (PAXG) is a gold-backed crypto to give investors of all class access to the commodity, gold.
- Paxos has received a license from Singapore’s MAS, and can now offer PAX Gold and other cryptos in the country.
- Paxos has also outlined its recommendations for how stablecoins can be safely issued globally.
- PAXG has been more stable than most cryptos, while slowly trending upwards, gaining 9.7% in the last three months.
Project Review
PAX Gold (PAXG) is a gold-backed ERC-20 token, launched by Paxos, the creators of the Paxos Dollar stablecoin and itBit crypto exchange, and the sole issuers of the BSUD stablecoin.
Paxos launched PAX Gold in September 2019 to make gold more tradable, since the physical commodity is not as easily accessible, divisible, or flexible in terms of transportation. PAXG is entirely backed by a piece of London Good Delivery gold bar.
PAXG is pegged to the price of gold and the gold bars held by Paxos are stored in the vaults of Brinks, an approved storage company. PAXG allows investors to buy and hold small amounts of gold, eliminating the minimum buy entry for the commodity.
Being stored on a blockchain is also an added advantage as investors need not worry about storing and securing physical gold. Regulated by the London Bullion Market Association (LBMA), PAXG can be redeemed for actual bullion.
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Recent Developments and Future Events
Paxos, the issuer of PAXG has continued leading developments for regulated blockchain infrastructure platforms. Last month Paxos received a license from the Monetary Authority of Singapore (MAS) to offer digital payment token services in the country.
Paxos can now offer the PAXG, along with its other digital assets and blockchain services in Singapore. The license makes Paxos the first U.S.-Based blockchain infrastructure platform to secure regulatory oversight in key financial hubs of New York and Singapore.
To assure users of the safety of their funds amidst the growing volatility and distrust in the crypto industry, on December 13th, Paxos’ treasury and operations departments processed more than $3 billion in customer stablecoin redemptions.
The experiment from Paxos, which holds the first limited-purpose trust charter for digital assets from the New York Department of Financial Services (NYDFS), was to reassure users of the company’s reserves and corporate controls can withstand any external stress.
Paxos has also submitted its recommendations to the Financial Stability Board (FSB) on how best agencies can safely regulate a global, fiat-backed stablecoin, and its issuer. Paxos notes that stablecoins should be overseen with the “same activity, same risk, same regulations” used in traditional finance.
However, Paxos argues that the Money transmitter licenses (MTLs) and money services business licenses (MSBs) are insufficient for the safe issuance of stablecoins. Paxos believes that stablecoin issuers should follow a strict framework to protect consumers.
Paxos has also partnered to launch Crypto SourceTM, a first-of-its-kind technology solution designed to enable financial institutions to bring secure crypto trading capabilities and services to their customers.
By partnering with MasterCard its financial institution partners suite of buy, hold, and sell services for select crypto assets, augmented with a proven identity, cyber, security, and advisory services.
Price Updates
PAX Gold (PAXG), being pegged to gold, has been one of the more stable digital assets, next to stablecoins. However, unlike stablecoins, PAXG has been steadily – albeit slowly – trending upwards.
The 24 hours price chart for PAX Gold (PAXG). Source: CoinMarketCap
PAXG has gained 0.21% over the last 24 hours and 0.90% in the last seven days. However, while most cryptos are down double digits over the last three months, the price of PAXG has gained 9.83%.
The three months price chart for PAX Gold (PAXG). Source: CoinMarketCap
The stability of PAXG made it one of the most used cryptos just after the FTX collapse, with its trading volume jumping from $7.5 million on November 6th to over $164 million on November 12th. PAXG is ranked as the 65th largest crypto with a market cap of $490 million.
On the Flipside
- Unlike traditional cryptocurrencies, users holding PAXG can only expect gains and large price movements when the commodity, gold makes an impulsive move in the market.
Community
While Paxos Gold may not enjoy the robust community of most traditional crypto projects, members are great believers in the project, thanks to PAXG being backed by actual gold. PAX Gold community members are also great believers in gold’s ability as a store of value.
Commenting on the business model of PAX Gold, crypto and DeFi scholar, Sébastien Derivaux wrote;
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$PAXG business model is based on 0.2% transaction fees while custody cost are based on AuM.
Yet it works quite well, providing @PaxosGlobal always more than 10bps AuM (not sure it is enough) and is a better alternative than $GLD for holders. pic.twitter.com/hokhU6a6Vp— Sébastien Derivaux (@SebVentures) December 21, 2022
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Highlighting the strong performance of PAXG amidst the FTX collapse, one Twitter user, @somethingpool wrote;
PAX Gold (PAXG) Trades In Green While Other Coins Struggle / The FTX controversy has pulled the entire crypto market down, with top tokens struggling to stay afloat. Despite the bearish sentiment, PAX Gold (PAXG) has continued to trade in the green zone, keeping substantial int… pic.twitter.com/ePJopaYkKf
— jjz.eth (@somethingpool) November 15, 2022
Reacting to the soaring volumes of PAXG, another user @Contang96753615 wrote;
#PaxGold Volume
looks like some whales parking here pic.twitter.com/oLZwEyTyDp— Nothing to See Here (@Contang96753615) December 21, 2022
Why You Should Care
PAXG allows investors who otherwise wouldn’t have had access to buying gold, to own the asset. As long as gold remains a store of value, the use of PAXG is bound to persist. With over $3.5 trillion of the total gold available today used for investment, PAXG can become a major driver for retail investors looking to hold gold.
