Why Paxos Remains a Benchmark for Institutional Crypto Security

As big investors warm up to digital assets, Paxos is making its mark with a focus on safety and regulation. Known for its trusted infrastructure, Paxos provides secure custody services for platforms like EDX Markets, a partnership that kicked off in 2022. The idea was simple, give professional traders a reliable way to store and manage crypto, while meeting strict compliance standards. In a market where regulation and trust matter more than ever, collaborations like this show how blockchain and traditional finance can come together. By blending Wall Street-grade security with crypto innovation, Paxos is helping shape the future of digital assets where institutions feel confident stepping in, and the industry moves one step closer to the mainstream.

Bringing Wall Street Security to Crypto Trading

Back in October 2022, Paxos, a New York-based blockchain infrastructure firm, landed a major role in EDX Markets’ ecosystem by handling digital asset custody. The deal made sense EDX, backed by giants like Citadel Securities, Fidelity Digital Assets, and Charles Schwab, wanted a trusted partner to keep assets safe while it built an exchange designed exclusively for institutional traders.

At the time, Paxos called its enterprise platform “best-in-class,” promising to manage custody and wallet infrastructure for financial heavyweights entering crypto. While EDX promoted a noncustodial model to avoid conflicts of interest, it still needed reliable third-party custodians to safeguard funds and that’s where Paxos came in.

The partnership allowed EDX to offer trading in leading cryptocurrencies like Bitcoin and Ether, with Paxos ensuring assets were stored in bankruptcy-remote accounts. For institutions dipping into digital assets, this setup offered the best of both worlds, trading flexibility backed by the kind of security and compliance Wall Street expects.

Why Regulation Makes Paxos Stand Out

One of Paxos’ biggest strengths is its regulatory credibility. It became the first crypto company approved in both New York and Singapore, setting it apart in an industry often criticised for weak oversight. Paxos operates under a trust charter from the New York Department of Financial Services  and holds a major payments institution license from the Monetary Authority of Singapore (since 2022).

What does that mean in practice? It allows Paxos to provide qualified custody, where client assets are fully segregated and protected. In simple terms,customers’ funds don’t get mixed with company funds, which helps shield them from risks like hacks or bankruptcies that have rocked other, less regulated platforms.

EDX Moves On, But Paxos’ Influence Remains

Partnerships in crypto don’t always stay the same. By mid-2023, EDX switched its custody partner from Paxos to Anchorage Digital, following reports of regulatory pressure on Paxos linked to its stablecoin business. Fast forward to April 2025, and EDX announced yet another shift this time teaming up with BitGo for custody and settlement services, a move aimed at boosting institutional adoption.

“We are thrilled to partner with EDX Markets as a key custody and settlement services provider,” BitGo said in its statement, underscoring EDX’s ongoing fine-tuning of its operational framework.

Still, Paxos’ early role shouldn’t be overlooked. Its initial partnership with EDX showcased how secure, regulated custody could be built into institutional crypto trading. Even though EDX has moved on, Paxos set a standard that continues to shape how the sector approaches safety and compliance today.

Building a Full Crypto Brokerage

Paxos isn’t just about custody for EDX it offers a lot more. Through its Crypto Brokerage service, available on paxos.com, institutions can buy, sell, transfer, and even reward with digital assets. All of this sits under a strong regulatory umbrella covering all 50 U.S. states and Singapore. The perks stand out. Instant settlement. Insurance-backed storage. Enterprise-grade security. These features make Paxos attractive to financial institutions looking for reliability in a market often marked by uncertainty.

But the real value comes from how Paxos is structured. Unlike some platforms, Paxos doesn’t trade against its clients, which eliminates counterparty risk. Instead, it connects institutions to a network of trusted liquidity providers, ensuring fairness and transparency in every transaction. In short, Paxos blends the speed and efficiency of crypto with the safeguards of traditional finance, giving enterprises confidence to step deeper into digital assets.

Paxos’ Stablecoin and Lasting Influence

On-chain data continues to highlight Paxos’ reliability. Its stablecoins USDP and the newer Lift Dollar (USDL) are each fully backed 1:1 by U.S. dollars, with reserves audited every month. As of July 2025, USDP’s market cap was about $66 million, with all reserves transparently held in cash and equivalents.

Stablecoins like these are issued and redeemed using Ethereum smart contracts, ensuring transactions are verifiable directly on-chain. This transparency is a big reason Paxos has been able to withstand challenges like the $26.5 million fine from NYDFS in August 2025 over past oversight of Binance’s BUSD without disrupting its core custody services. The shifts in EDX’s custody partners show just how fluid the regulatory environment is. Exchanges and institutions need to adapt quickly to stay compliant. But even as EDX moved from Paxos to Anchorage Digital and now to BitGo, the model Paxos pioneered regulated, transparent, and secure custody remains a benchmark across the industry.

Innovation Beyond Custody

Paxos isn’t standing still. In June 2025, it launched Paxos Labs, a new initiative aimed at expanding on-chain access by weaving DeFi products directly into user experiences. For institutions, that means custody, trading, and payments can all be integrated seamlessly under one roof. Of course, challenges remain crypto markets still face volatility, regulatory shifts, and global tensions. But if history is any guide, Paxos has shown it can adapt and stay resilient through storms. For investors, the takeaway is clear, secure custody isn’t just another box to check it’s the foundation for sustainable crypto growth. And Paxos continues to prove it knows how to build that foundation, while also pushing the boundaries of what’s next.

FAQs

1. What role does Paxos play for EDX Markets? Paxos provided secure, regulated crypto custody for EDX Markets, ensuring safe storage of digital assets for institutional traders.

2. Why is Paxos trusted for custody? Paxos holds approvals from New York and Singapore regulators, offering segregated, bankruptcy-remote accounts for client assets.

3. What are institutional crypto custodians on paxos.com? They provide secure storage, trading, and settlement services for digital assets, tailored for enterprises under strict compliance.

4. Why did EDX switch from Paxos to BitGo? EDX shifted to BitGo in April 2025 to enhance custody and settlement, reflecting evolving regulatory and operational needs.

5. How does Paxos ensure asset safety? Paxos uses audited reserves, insurance-backed storage, and Ethereum smart contracts for transparent, secure custody.