Paxos Bets on DeFi's Transformation, Merging Security with Decentralization

Paxos, a leading regulated blockchain infrastructure platform, has acquired Fordefi in a strategic move to strengthen its offerings in the on-chain economy. The acquisition, which terms were not disclosed by Paxos but reported to exceed $100 million by a spokesperson, combines Paxos' decade-long expertise in regulated custodial services with Fordefi's multi-party computation (MPC) wallet architecture and deep decentralized finance (DeFi) integrations. This integration aims to provide clients with a unified platform for issuing stablecoins, tokenizing assets, and executing complex payment flows while maintaining high security and compliance standards.

Fordefi, founded in 2021 and headquartered in New York with offices in Tel Aviv, serves nearly 300 global institutions and safeguards over $120 billion in monthly transaction volume. Its MPC wallet technology enables secure, seamless digital asset operations across centralized and decentralized workflows, addressing key challenges in DeFi connectivity and governance. "Fordefi has built a best-in-class wallet platform trusted by nearly 300 institutions," said Josh Schwartz, Fordefi's CEO, emphasizing that the partnership with Paxos will expand its reach while preserving its focus on innovation.

Paxos CEO Charles Cascarilla highlighted the acquisition as a response to growing demand for secure, modular custody solutions as digital asset adoption accelerates. "Market participants require a regulated platform partner that meets their range of complex custody needs," he stated, noting that Fordefi's user-friendly APIs and web3 connectivity align with Paxos' mission to bridge traditional finance and the digital asset economy. The integration of Fordefi's technology into Paxos' infrastructure will be phased, with Fordefi continuing to operate independently in the short term.

The deal marks Paxos' second major acquisition in a year, following its purchase of Finnish stablecoin issuer Membrane Finance to bolster EU regulatory compliance. With this expansion, Paxos reinforces its position as a key player in the $4.65 billion crypto venture capital-funded sector, catering to institutions like PayPal, Mastercard and Nubank. The company, licensed by regulators including the New York Department of Financial Services (NYDFS) and the Monetary Authority of Singapore, issues stablecoins such as PayPal USD (PYUSD) and Pax Dollar (USDP).

The acquisition also reflects broader industry trends. Traditional financial institutions, including Standard Chartered and Citi, are deepening their crypto infrastructure involvement, while regulators globally-such as Japan's proposed reserve rules for exchanges-are tightening oversight. For Paxos, the Fordefi deal underscores a strategic bet on DeFi, a sector once deemed too risky for institutions but now attracting corporate interest in decentralized lending and tokenized assets.