PAX Gold (PAXG): what it is and how it works

What is PAX Gold (PAXG)

PAX Gold (PAXG) is a unique cryptocurrency introduced in 2019 by the Paxos Trust Company. This stablecoin is backed by physical gold reserves held by the company, making gold more accessible and divisible through tokenisation on the Ethereum blockchain.

Why buy PAX Gold (PAXG)

Paxos undergoes monthly checks to certify that its supply of tokens actually corresponds to the amount of gold it has in its vaults. Users can redeem PAXG for gold bars at any time if they wish. The project has effectively brought commodities into the crypto world, allowing people to invest in a store of value like gold without physically owning it through its tokenization. The main advantage of buying PAX Gold (PAXG) seems obvious: buying it would mean holding physical gold while being able to take advantage of the positive sides of virtual assets, from speed to mobility, and eliminating aspects such as storage and actual transport of the metal.

Origins and development of Paxos Trust Company

The Paxos Trust Company was founded in 2012 and was known as itBit Bitcoin Exchange until 2015. The company was the first crypto exchange to be approved and regulated in the United States. In 2015, it rebranded to Paxos and continued to grow, forming a significant partnership with PayPal to facilitate the buying, selling, and custody of cryptocurrencies via the payment app. In 2019, after raising approximately $65 million in funding, Paxos launched PAX Gold, an innovative gold-based stablecoin.

Features and functioning of PAX Gold

PAX Gold is designed to represent gold in a more flexible and tradable form. It is a stablecoin whose value is backed by real gold reserves held by the company. Each token is redeemable for 1 troy ounce of fine gold stored in vaults by Paxos and its partners, and its market value is intended to reflect the physical gold it represents. Users can trade PAXG with other cryptocurrencies on the Ethereum blockchain, enjoying the benefits of speed and mobility of digital assets without the physical constraints of storing and transporting gold.

Transparency and security

Paxos is committed to ensuring the transparency and security of its PAXG token. The company subjects its gold reserves to monthly independent audits to confirm that the number of tokens in circulation corresponds to the amount of gold held in the vaults. Additionally, users can redeem their PAXG tokens for physical gold bars at any time, thus ensuring the convertibility of the token into real gold.

Innovation in the commodities market

PAX Gold represents a significant innovation in the cryptocurrency and commodities sector. The tokenisation of gold allows people to access a stable store of value like gold without physically managing its storage. This brings the commodities market closer to the world of cryptocurrencies, offering new opportunities for use and investment.

PAXG in the context of MiCA

The European Regulation No. 2023/1114 entry into force of 31 May 2023, concerning the Markets in Crypto-Assets (MiCA), marked a significant milestone for stablecoins and the digital asset market throughout the European Economic Area (EEA). A first block of the regulation came into effect on 30 June 2024, significantly impacting stablecoins. MiCA defines stablecoins in two main categories: ART (Asset-Referenced Tokens) and EMT (E-money Tokens), for which specific requirements are provided in articles 16 and 48 of the regulation. Furthermore, on 25 June 2024, the Italian government approved a Legislative Decree to adapt the national regulatory framework to the MiCA Regulation, ensuring coordination with existing sector provisions in Italy, particularly with the TUB and TUF.

Further Information

To learn more about PAX Gold, visit the official website (paxos.com/paxgold/), consult the documentation (docs.paxos.com/stablecoin), and read the whitepaper (paxos.com/wp-content/uploads/2019/09/PAX-Gold-Whitepaper.pdf). Contact the team via the contact page (paxos.com/contact/) for any questions. For complaints, submit a support request through the help centre (help.paxos.com/hc/en-us/requests/new) or call (855) 880 5275. In New York State, you can also direct your complaint to the regulatory body: New York State Department of Financial Services, One State Street, New York, NY 10004-1511, 1-800-342-3736. For law enforcement information requests or subpoenas, contact [email protected].