Paxos, the blockchain infrastructure firm behind PayPal’s $3.74 billion PYUSD stablecoin, will integrate Fordefi’s advanced wallet technology into its custody platform. Fordefi will continue operating independently during the transition, with terms of the transaction remaining undisclosed beyond the price range.

What Fordefi Brings to the Table

Founded in 2021 by Josh Schwartz, Dima Kogan, and Michael Volfman, Fordefi operates from offices in New York and Tel Aviv. The startup has built a multi-party computation wallet platform that serves nearly 300 institutional clients and processes over $120 billion in monthly transaction volume.

The company raised $28 million across two funding rounds. An $18 million seed round in November 2022 was led by Lightspeed Venture Partners, followed by a $10 million extension in February 2024 led by Electric Capital. Notably, Paxos participated as an investor in that second round, signaling early strategic interest in the company.

Source: @Paxos

Fordefi’s technology splits transaction approvals across multiple devices or parties using cryptography. This approach reduces the risk of private key compromise, a major security concern for institutions holding digital assets. The platform supports over 90 blockchain networks and includes built-in compliance tools and policy controls.

Why Paxos Needs Wallet Technology

The acquisition addresses a shift in institutional behavior. Large companies that once avoided decentralized finance are now exploring its potential for lending, trading, and yield generation. However, they require regulated partners who can provide both traditional custody and access to DeFi protocols.

“Enterprises want a regulated partner they can trust with complex wallet and custody needs,” said Charles Cascarilla, CEO and co-founder of Paxos, in a statement. He told Fortune that Paxos “certainly hear it all the time” from customers requesting broader DeFi access, though he declined to name specific clients.

Paxos currently serves major financial institutions including PayPal, Mastercard, Interactive Brokers, and Brazilian neobank Nubank. The company issues three regulated stablecoins: PayPal USD (PYUSD), Global Dollar (USDG), and Pax Dollar (USDP). It also operates under oversight from regulators in New York, Singapore, Abu Dhabi, and Finland.

Broader Industry Trend

Paxos isn’t alone in pursuing wallet acquisitions. Payment giant Stripe bought crypto wallet provider Privy in June 2025, following its $1.1 billion acquisition of stablecoin firm Bridge earlier in the year. Blockchain company Ripple also purchased wallet provider Palisade in November 2025 as part of a broader acquisition strategy.

These deals reflect growing recognition that wallet infrastructure serves as critical plumbing for managing digital assets. As stablecoins and tokenized assets gain adoption, financial firms are building or buying the technology to support customer needs.

The timing aligns with increasing mainstream interest in decentralized finance. In September 2025, cryptocurrency exchange Coinbase launched a feature allowing customers to borrow money through the DeFi lending protocol Morpho. Traditional banks have also begun tokenizing money-market funds, which many view as a stepping stone toward deeper institutional participation.

Paxos’s Expansion Strategy

This marks Paxos’s second acquisition within a year. In February 2025, the company completed its purchase of Membrane Finance, a Finnish electronic money institution. That deal gave Paxos a license to operate in the European Union and comply with the region’s Markets in Crypto-Assets (MiCA) regulations.

Together, these acquisitions position Paxos as a full-spectrum infrastructure provider. The company can now offer customers regulated stablecoin issuance, qualified custody services, and wallet technology for interacting with DeFi applications—all under one platform.

Founded in 2012, Paxos has raised over $500 million from investors including Oak HC/FT, Declaration Partners, Founders Fund, and PayPal Ventures. The company holds regulatory licenses in multiple jurisdictions and has processed more than $180 billion in tokenization activity since 2018.

Market Context and Future Outlook

The stablecoin market has experienced significant growth, with total market capitalization reaching approximately $303 billion in 2025. This represents an increase of nearly $100 billion since the start of the year, driven by regulatory clarity in the United States and Europe.

Fordefi was valued at $83 million during its last funding round, according to PitchBook data. The startup employs approximately 40 to 50 people, with about 35 based in its Tel Aviv office. All employees will remain with the company following the acquisition.

“Fordefi has built a best-in-class wallet platform trusted by nearly 300 institutions,” said Josh Schwartz, CEO of Fordefi. “Joining Paxos allows us to bring our technology to an even broader audience while maintaining our focus on security, usability and innovation.”

The Bottom Line

The Fordefi acquisition strengthens Paxos’s position as institutions increasingly demand both regulatory compliance and access to decentralized finance. By combining regulated custody with advanced wallet technology, Paxos aims to become the go-to partner for enterprises entering the digital asset economy. As more financial firms explore blockchain-based services, the race to provide comprehensive infrastructure solutions is accelerating across the industry.

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Filed under: Bitcoin - @ November 25, 2025 10:06 pm