Paxos Merges Regulated Custody and DeFi Security via Fordefi Buy

Paxos, a leading blockchain infrastructure provider, has acquired Fordefi, an institutional crypto wallet startup, for over $100 million in a strategic move to expand its decentralized finance (DeFi) custody solutions. The deal, confirmed by multiple sources, aims to integrate Fordefi's multi-party computation (MPC) wallet technology into Paxos' regulated custody infrastructure, enabling institutions to securely manage on-chain transactions and access DeFi protocols. This acquisition marks Paxos' second major purchase in a year, following its acquisition of Finnish stablecoin issuer Membrane Finance.

Fordefi, founded in 2021, specializes in MPC-based wallets that secure digital assets for over 300 institutional clients, safeguarding more than $120 billion in monthly transaction volume. The startup's technology allows for decentralized governance of transactions, enabling institutions to authorize and sign on-chain operations without relying on traditional custodial systems. By combining Fordefi's capabilities with Paxos' regulated infrastructure, the firm aims to create a unified platform for stablecoin issuance, asset tokenization, and on-chain settlement.

Charles Cascarilla, CEO and co-founder of Paxos, emphasized the strategic alignment between the two companies. "Together, Paxos and Fordefi provide customers with a world-class custody solution built upon advanced wallet technology and regulated, qualified custody," he stated. The acquisition reflects growing institutional demand for secure, compliant access to DeFi, a market segment that has seen rapid adoption despite persistent risks such as hacks and regulatory uncertainty.

Paxos, which is licensed in the U.S., Europe, and Singapore, has been a key player in bridging traditional finance and blockchain. The firm issues stablecoins like PayPal USD (PYUSD) and Global Dollar (USDG), and partners with major enterprises including PayPal, Mastercard, and Interactive Brokers. The Fordefi acquisition underscores Paxos' broader strategy to offer a comprehensive suite of crypto services under regulatory oversight, including custody, stablecoins, and DeFi integrations.

The deal also highlights a broader industry trend of institutional players embedding DeFi protocols into their offerings. Companies like Kraken, Coinbase, and Crypto.com have recently expanded their on-chain capabilities, integrating DeFi lending platforms and tokenized assets to attract users seeking higher yields and greater liquidity. According to DefiLlama data, DeFi protocols currently hold approximately $116 billion in total value locked, signaling increased confidence in decentralized systems.

Paxos' expansion into DeFi custody comes as regulators globally begin to formalize frameworks for decentralized finance. In the UAE, for instance, new financial laws now include DeFi and Web3 technologies within their regulatory scope. The firm's focus on compliance aligns with these evolving standards, positioning it to capitalize on the growing demand for institutional-grade crypto infrastructure.

While the exact terms of the Fordefi deal remain undisclosed, a Paxos spokesperson confirmed the transaction's value exceeds $100 million. The acquisition is expected to strengthen Paxos' competitive edge in a market where secure, scalable custody solutions are critical for institutional adoption of digital assets.