Paxos Just Bought Fordefi: What This Shocking Move Means for Your Crypto Future!

Paxos, a prominent player in the blockchain space, has made headlines with its acquisition of Fordefi, an institutional crypto wallet provider, for more than $100 million. This marks the company's second significant acquisition in 2025, following a strategic move to bolster its offerings amid a rapidly evolving financial landscape.

Announced on Tuesday, the deal aims to address surging customer demand for secure access to decentralized finance (DeFi) while ensuring regulatory compliance. Paxos, known for underpinning PayPal’s $3.74 billion PYUSD stablecoin, plans to integrate Fordefi's cutting-edge wallet technology into its custody platform. Notably, Fordefi will maintain its independent operations during the transition, though the specific terms of the transaction have not been disclosed beyond the purchase price.

Fordefi's Innovations in Wallet Technology

Founded in 2021 by Josh Schwartz, Dima Kogan, and Michael Volfman, Fordefi operates from its offices in New York and Tel Aviv. The startup has developed a multi-party computation wallet platform that currently serves nearly 300 institutional clients and processes over $120 billion in monthly transaction volume. This innovative approach to wallet technology splits transaction approvals across multiple devices or parties, utilizing cryptographic techniques to significantly reduce the risk of private key compromise, a major concern for institutions managing digital assets.

Fordefi has successfully raised $28 million through two funding rounds, which included an $18 million seed round in November 2022 led by Lightspeed Venture Partners, followed by a $10 million extension in February 2024, led by Electric Capital. Interestingly, Paxos also participated as an investor in the latter round, indicating early strategic interest in Fordefi’s capabilities.

Strategic Necessity for Wallet Technology

The acquisition reflects a notable shift in institutional behavior. Large companies that once steered clear of DeFi are now recognizing its potential for various financial activities, including lending, trading, and yield generation. Nevertheless, these enterprises are increasingly seeking regulated partners who can offer both traditional custody solutions and access to DeFi protocols. Charles Cascarilla, CEO and co-founder of Paxos, emphasized this trend, stating, “Enterprises want a regulated partner they can trust with complex wallet and custody needs.” He noted that Paxos frequently receives requests from clients for broader access to DeFi, though he refrained from naming specific customers.

Paxos currently provides services to major financial institutions such as PayPal, Mastercard, Interactive Brokers, and Brazilian neobank Nubank. The firm issues three regulated stablecoins: PayPal USD (PYUSD), Global Dollar (USDG), and Pax Dollar (USDP). Additionally, it operates under the supervision of regulators across various jurisdictions, including New York, Singapore, Abu Dhabi, and Finland.

Market Dynamics and Future Outlook

The acquisition comes at a time when there is a broader industry trend toward wallet acquisitions. For instance, Stripe acquired crypto wallet provider Privy in June 2025, following its $1.1 billion purchase of stablecoin firm Bridge earlier in the year. Similarly, Ripple acquired wallet provider Palisade in November 2025 as part of its larger acquisition strategy. These developments underscore the growing acknowledgment that wallet infrastructure is crucial for managing digital assets.

The timing of Paxos's acquisition aligns perfectly with increasing mainstream interest in DeFi. In September 2025, cryptocurrency exchange Coinbase introduced a feature enabling customers to borrow funds through the DeFi lending protocol Morpho. Traditional banks have also begun to tokenize money-market funds, a move viewed by many as a precursor to greater institutional involvement in blockchain-based services.

This acquisition marks Paxos’s second in less than a year, following its purchase of Membrane Finance, a Finnish electronic money institution, in February 2025. This earlier deal not only expanded Paxos's capabilities but also provided it with a license to operate in the European Union, ensuring compliance with the region’s Markets in Crypto-Assets (MiCA) regulations.

Collectively, these strategic acquisitions position Paxos as a comprehensive infrastructure provider, capable of offering regulated stablecoin issuance, qualified custody services, and wallet technology for engaging with DeFi applications—all under one umbrella. Founded in 2012, Paxos has raised over $500 million from investors, including Oak HC/FT, Declaration Partners, Founders Fund, and PayPal Ventures. The company has processed over $180 billion in tokenization activity since 2018.

The stablecoin market has witnessed remarkable growth, with the total market capitalization reaching approximately $303 billion in 2025, an increase of nearly $100 billion since the beginning of the year. This surge has been fueled by greater regulatory clarity in both the United States and Europe.

As institutions increasingly demand both regulatory compliance and access to decentralized finance, the acquisition of Fordefi enhances Paxos's standing in the financial services landscape. By merging regulated custody with advanced wallet technology, Paxos is poised to become a leading partner for enterprises eager to navigate the complexities of the digital asset economy. As more financial firms embrace blockchain-based services, the industry is racing to deliver comprehensive infrastructure solutions that meet evolving customer needs.