On September 10, 2018, the New York Department of Financial
Services ("DFS") authorized Gemini Trust Company and
Paxos Trust Company to each offer a price-stable cryptocurrency,
also known as a stablecoin, pegged to the U.S. dollar. Both Gemini
and Paxos hold limited purpose trust company charters under the New
York Banking Law and are authorized to offer services for buying,
selling, sending, receiving and storing virtual currency. Gemini is
controlled by the Winklevoss brothers, whose application for a
Bitcoin ETF was recently
denied by the SEC.
The DFS's press release announcing
approval of the new virtual currency products described a lengthy
series of operating conditions intended to protect consumers, the
violation of which could lead to regulatory sanctions including
charter forfeiture. Both Gemini and Paxos are required to:
