The USDP stablecoin lost its peg briefly on Feb. 10 after falling to $0.98. The New York Department of Financial Services (NYDFS) is reportedly probing Paxos.
The USDP stablecoin, managed by Paxos, briefly lost its $1 peg and is hovering at around $0.98. This is not the first time the stablecoin has lost its peg, with the asset showing multiple instances of this throughout 2022.
The Pax Dollar stablecoin was created in 2018. It is not as popular as competing stablecoins like USDT and USDC but has still managed to find a market.
The fluctuation in prices took place not long after The New York Department of Financial Services (NYDFS) said that it was investigating issuer Paxos. The agency did not offer any more details on the matter, according to sources that first reported the news.
The investigation is one reason that the stablecoin may have lost its peg, but Paxos has also made headlines for other reasons. The U.S. Office of the Comptroller of the Currency was rumored as considering asking Paxos to withdraw its application for a national trust bank charter. Paxos has denied this.
NYDFS Not Taking Crypto Market Lightly
The NYDFS has taken multiple actions in recent times in a bid to exert some control over the crypto market. In June 2022, Superintendent Adrienne A. Harris issued regulatory guidance for stablecoins backed by the U.S. Dollar.
More recently, it issued guidance on custodial standards for companies registered in New York state. This was sparked by the several bankruptcies that have taken place in the crypto industry. Meanwhile, it issued a $30 million fine to Robinhood Crypto for several reasons.
Paxos Making Headway with Collaborations
Paxos has recently gained attention for its efforts to increase its market presence. The company made headlines with the announcement of a partnership with MakerDAO, a leading player in the DeFi space. This collaboration aims to boost the Pax Dollar in the Peg Stability Module on MakerDAO.
Paxos has also received approval from the Monetary Authority of Singapore (MAS). The country appears to be a major target for the project, with Paxos planning to hire at least 130 individuals in the country. It has also joined forces with Mastercard to offer crypto trading to banks.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.