Paxos regulated infrastructure platform announced its expansion to Ethereum’s Layer 2 scaling solution, Arbitrum. The collaboration marks Paxos' first partnership with an L2 network, enhancing its ability to provide stablecoin issuance and tokenization services.

There is still uncertainty about the specific product Aptos will launch on Arbitrum.

Paxos Expands into Layer 2 with Arbitrum

Arbitrum is one of the largest Layer 2 networks, known for its speed, scalability, and security. With over $2.5 billion in total value locked (TVL), Arbitrum has emerged as a critical player in Ethereum's scaling efforts.

This integration reportedly opens new opportunities for both retail and institutional clients, who can leverage the network to create innovative financial products.

Paxos’ entry into Arbitrum will allow the firm to access Ethereum’s deep liquidity while reducing transaction costs, according to a recent press release. This is particularly important as Paxos continues to drive adoption of its stablecoins and tokenized assets, which require efficient infrastructure to operate smoothly. 

Luke Xiao, Fintech Partnership Lead at Offchain Labs, the developers behind Arbitrum, welcomed the move, stating:

“Paxos’ stablecoin issuance and regulated tokenization platform will thrive on Arbitrum’s high-performance network. This collaboration will bring transformative impacts to DeFi and the broader Arbitrum ecosystem.”

Paxos' tokenization platform, which follows strict regulatory guidelines, ensures that institutional and enterprise clients can operate with confidence. 

Arbitrum’s Role in Stablecoin Growth

The demand for stablecoins has grown significantly in recent years, with institutions and enterprises increasingly adopting them for payments, lending, and other financial services. 

According to Paxos' Head of Strategy, Walter Hessert, the stablecoin market is set for exponential growth over the next three years, driven by both retail and institutional users.

“Arbitrum is known for its speed, security, and scalability, which is critical for driving long-term adoption of digital assets across industries. Paxos is well-positioned to support that growth,” Hessert noted.

As a result of its integration with Arbitrum, Paxos hopes to facilitate the broader adoption of stablecoins, particularly in areas where fast, low-cost transactions are imperative. This partnership is expected to encourage more financial products and services built on stablecoins.

A Strong Foundation in Regulatory Compliance

Paxos has established itself as a trusted player in the digital asset space, largely due to its commitment to regulatory compliance. 

Earlier this year, Paxos received approval from the Monetary Authority of Singapore (MAS) to issue stablecoins in the region. As a result of this approval, Paxos is now able to offer digital payment tokens in one of the world's most regulated markets. 

The firm has also secured partnerships with leading financial institutions, including DBS Bank, which will act as a custodian for stablecoin reserves in Singapore.