Paxos acquires Electronic Money Institution license for the EU, aims to bring compliant stablecoins

Paxos now holds an Electronic Money Institution (EMI) status, after acquiring Finnish company Membrane Finance. Paxos aims to boost its compliance with EU law, to position its stablecoins back on the Euro area market. 

Paxos, one of the main stablecoin issuers, has completed the acquisition of Finnish company Membrane Finance. The acquisition also grants Paxos an Electronic Money Institution status for the Euro area. The stablecoin issuer started the acquisition process after the first announcement in November 2024 and is now completing the process. 

This morning, we finalized the acquisition of Membrane Finance, officially becoming a fully licensed EMI in Finland and the EU. 🇫🇮🇪🇺

This milestone allows us to expand our regulated platform to serve European customers safely and responsibly, while paving the way for MiCA… pic.twitter.com/hzYocgdrT3

— Paxos (@Paxos) February 4, 2025

The approach of Paxos recalls the recent MiFID status of Kraken, also achieved through the acquisition of a Euro area accredited brokerage company. 

The acquisition means Paxos is a fully licensed EMI operator for Finland and the entire European Union. The status was first introduced in 2009 based on the Electronic Money Directive. Since 2023, the EU regulation expanded its framework on payment services, financial data access, and consumer protection.

Membrane Finance specializes in crossing the bridge between digital finance and crypto services. The firm is already offering to build Euro-area regulated stablecoins tailored to the needs of business projects.

In theory, Paxos could rebuild its assets or launch new ones using Membrane Finance’s approach. The firm was fully regulated by the Financial Supervisory Authority in Finland and is already MiCA compliant when it comes to the transparency of its reserves. 

Membrane Finance issues the EUROe stablecoin based on the Euro Area common currency. The token is also open to developers and has built the infrastructure to launch with bank-based fiat backing. EUROe is already available for swapping through native crypto services, including Uniswap, Jupiter, and Raydium.

Paxos was one of the crypto stablecoin issuers most affected by the MiCA regulation, which led to the delistings of most of its assets. Pax Dollar (PAX) was among the tokens delisted by Crypto.com, though for now retained by Kraken. The exchange also delisted PayPal USD (PYSD) by Paxos as part of its compliance changes.

Paxos aims to issue compliant stablecoins but has stated it has additional requirements to cover before becoming fully compliant with the new regulations. 

Paxos still has to produce compliant stablecoins

All Paxos stablecoins are USD-backed and are available internationally. The main requirement of MiCA regulations is to have a report of fiat reserves in an accredited banking institution. Paxos will aim to offer stablecoins covering this requirement, which are not threatened by delistings from EU exchanges and brokerages. 

Pax Dollar (USDP) has a relatively limited supply of 81M tokens and is used mostly on niche exchanges. Paxos aims to offer regulated services for real-world asset tokenization, including the creation of Pax Gold based on precious metals. 

Paxos was one of the first stablecoin issuers to be aware of MiCA regulations, starting its preparation as far back as 2023. Some of the supply of USDP was in fact burned in preparation for future delistings. 

Paxos continues to carry its assets for other networks. Overall, the project is responsible for 1.4% of all tokenized real-world assets. The platform also carries Global Dollar (USDG), Lift Dollar (USDL), PYUSD, and Pax Gold (PAXG). However, Paxos directs all asset issuance based on local regulations and the needs of businesses. For that reason, most of the Paxos products are niche and not part of the general trend of unregulated stablecoin issuance. 

Even during the busiest times for stablecoin activity, Paxos assets only have around 260K users, with hundreds to thousands of senders and receivers. The introduction of MiCA and the regulated status for the Euro Area may allow Paxos to grow its portfolio on increased demand for transparent assets with a fully regulated status. 

The move by Paxos follows the recent delistings of Tether (USDT) from EU exchanges and brokerages, starting from January 31. By that time, Tether has still not secured a reliable banking service, despite posting its reserves of other liquid assets. Some of the brokerages offer to exchange USDT but do not offer to sell the asset, instead focusing on compliant tokens like USDC.

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