The New York State Department of Financial Services ("NYDFS") authorized an existing NYDFS licensee to offer a gold-backed virtual currency. This is the first gold-backed virtual currency in New York State.
In addition to authorizing Paxos Trust Company LLC to offer PAX Gold, NYDFS also approved BUSD, a virtual currency pegged to the U.S. dollar.
Commentary
The new "currency" is essentially a blockchain-based, custodial receipt for physical gold. It is unlikely that it will have that much use as a currency, at least within the United States, but perhaps merchants in countries where inflation is high, or where there is a threat of a governmental seizure of the banks, will find the product attractive as a currency.
Given that the asset is a custodial receipt for a physical asset, it should not be either a "security" for purposes of the securities law or a contract subject to the regulatory authority of the CEA, although the CEA does claim enforcement authority over fraud with respect to physical commodities.
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