Major institutions are increasingly looking beyond trading into decentralized finance, and the latest Paxos acquisition underlines how fast that shift is accelerating.
Summary
Why did Paxos move on Fordefi now?
Paxos, a veteran stablecoin and blockchain infrastructure provider, announced on Tuesday that it will acquire New York-based wallet startup Fordefi for more than $100 million. A Paxos spokesperson confirmed the price range but declined to share specific deal terms, underscoring how strategically sensitive the transaction is.
The company, founded in 2012, already powers crypto services for large partners such as PayPal and Nubank. Moreover, Paxos issues PayPal’s dollar-pegged stablecoin, which has a market capitalization of more than $3.6 billion, cementing its position as a key stablecoin issuer in the U.S. market.
The purchase of Fordefi, which specializes in crypto wallets engineered specifically for DeFi activity, shows that Paxos customers are increasingly demanding access to decentralized protocols. However, many of these institutions still require institutional-grade custody and compliance tooling before they commit more capital on-chain.
How does this deal fit into DeFi’s institutionalization?
Decentralized finance has long been viewed as one of the riskiest corners of the crypto ecosystem. Users can earn high yields through decentralized lending networks or liquidity pools. That said, these same protocols remain frequent targets for hacks and smart contract exploits, which has historically deterred risk-averse institutions.
Over the past year, large corporations have nonetheless begun to experiment more seriously with DeFi rails. In September, U.S. exchange Coinbase launched a feature allowing customers to borrow funds via the DeFi lending protocol Morpho. Moreover, traditional banks have started to tokenize money-market funds, placing them in blockchain-based wrappers that many see as a first step toward deeper institutional participation in decentralized finance.
“We certainly hear it all the time,” Paxos cofounder and CEO Charles Cascarilla told Fortune, referring to clients that want broader access to DeFi opportunities. However, he declined to identify which specific enterprise customers are pushing hardest for that access.
What does Fordefi bring to Paxos’s platform?
Founded in 2021, Fordefi has around 40 employees and serves approximately 300 clients, according to Cascarilla. The wallet startup was valued at $83 million in its last fundraising round, based on PitchBook data. Its technology is built to help institutions securely store and transact digital assets while interacting directly with DeFi applications.
For now, Fordefi will continue to operate independently, maintaining its brand and client relationships. However, Paxos plans to integrate the startup’s wallet technology into its broader infrastructure stack, a move that should make institutional DeFi access more seamless for existing partners like PayPal and Nubank.
The Fordefi crypto wallet stack is expected to complement Paxos’s existing settlement and tokenization tools. Moreover, the full primary keyword phrase paxos acquisition will likely be seen by the market as part of a broader effort to build a vertically integrated infrastructure suite spanning stablecoins, custody, and DeFi connectivity.
How does this compare to Paxos’s earlier expansion efforts?
This is Paxos’s second major deal in less than a year. In February, the company acquired Membrane Finance, a Finland-based stablecoin issuer. That transaction helped Paxos, which holds a trust charter in New York, meet requirements under MiCA, the European Union’s new regulatory regime for crypto assets.
Together, the move into European stablecoins and the Fordefi wallet startup deal illustrate a strategy that extends beyond simple token issuance. Moreover, these transactions suggest Paxos is positioning itself as a full-spectrum infrastructure provider for regulated institutions, spanning both traditional stablecoin rails and emerging DeFi channels.
While the firm has not disclosed a detailed integration roadmap, the pace of its dealmaking signals an expectation that regulated DeFi will see growing demand through 2024 and beyond. However, the balance between innovation and compliance will remain critical as more banks and fintechs enter decentralized markets.
What does this mean for the future of institutional DeFi?
For institutional investors, Fordefi’s security-focused wallet infrastructure under Paxos’s umbrella could lower operational barriers to exploring lending, liquidity provision, and tokenized funds on-chain. That said, persistent concerns around smart contract risk and regulatory clarity will likely keep many players in pilot mode for now.
As more regulated entities experiment with tokenized money-market funds and DeFi-based credit, demand for compliant custody and transaction workflows is expected to rise. Moreover, other players watching this paxos acquisition may feel pressure to either build or buy similar capabilities, accelerating consolidation in the crypto wallet and infrastructure segment.
In summary, the Fordefi deal reinforces Paxos’s push to unite stablecoins, wallets, and regulatory compliance within one infrastructure stack, setting the stage for the next phase of institutional DeFi adoption.
