Paxos, a leading blockchain infrastructure platform, has strategically positioned itself for an expansion into the European market by acquiring Membrane Finance, a Finnish Electronic Money Institution. This acquisition is set to transform Paxos’s operational scope by providing entry into the European Union’s financial market, pending regulatory approval.
The purchase of Membrane Finance is a significant move for Paxos as it will enable the company to become a fully licensed Electronic Money Institution (EMI) in Finland and throughout the EU. Membrane Finance holds a prestigious license from the Finnish Financial Supervisory Authority, which is recognized across 30 European countries. Walter Hessert, Paxos’s head of strategy, highlighted the acquisition’s potential impact, stating, “Stablecoins are becoming increasingly prevalent throughout the market as more use cases emerge for everyday users. With Membrane, we expect to extend our reach to EU customers looking to benefit from stablecoins.”
Membrane Finance is known for issuing the EUROe and eUSD stablecoins. Despite the EUROe’s launch in February 2023 seeing modest demand, the acquisition could bolster its visibility and utility in the market. This acquisition places Paxos in direct competition with other issuers of euro-pegged stablecoins, such as Stasis, Circle, Tether, and Celo. It is noteworthy that the eUSD issued by Membrane Finance is among the less active tokens that share the eUSD designation.
Paxos’s Diverse Stablecoin Portfolio
Paxos has been actively broadening its stablecoin offerings:
- Pax Dollar (USDP): Issued under the regulation of the New York State Department of Financial Services.
- Lift Dollar (USDL): A yield-bearing stablecoin regulated by the Abu Dhabi Global Market, launched in June.
- Global Dollar (USDG): Issued in collaboration with DBS Bank under Singapore Monetary Authority approval as of November 1.
In addition, Paxos’s participation in a recent consortium including major crypto and traditional finance companies like Robinhood, Galaxy Digital, Kraken, and others aims to “accelerate and reward global stablecoin adoption,” with a particular focus on USDG.
The European stablecoin market operates under the stringent regulations of the Markets in Crypto-Assets (MiCA) Regulation, which came into effect on July 1. Just a day before Paxos announced its acquisition of Membrane Finance, MiCA-compliant US dollar- and euro-pegged stablecoins (USDQ and EURQ, respectively) were issued by Dutch fintech Quantoz, supported by industry giants such as Tether, Kraken, and Fabric Ventures, and approved by the Dutch central bank.
| Issuer | Stablecoin | Notable Features |
|---|---|---|
| Paxos | EUROe | Part of recent EU expansion |
| Circle | USDC | Widely used in international markets |
| Tether | EURt | High liquidity |
| Stasis | EURS | Early market entry |
| Celo | cEUR | Mobile-first approach |
Paxos’s move to acquire Membrane Finance underscores a strategic effort to tap into the burgeoning demand for digital financial services in the EU. As stablecoins gain traction as a mainstream financial instrument, Paxos’s expanded portfolio and strategic partnerships position it well for future growth.
Paxos’s foray into the European market through the acquisition of Membrane Finance could be a game-changer for the stablecoin landscape. By integrating advanced blockchain solutions with Membrane’s established financial infrastructure, Paxos is not only poised to enhance service delivery but also to drive financial innovation in the region. This strategic move may catalyze further adoption of cryptocurrency solutions in mainstream banking and finance, illustrating a significant shift towards digital transformation in the European financial sector.
Featured image credit: Yanni Koutsomitis via Flickr
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