Paxos invested $100 million in the acquisition of Fordefi to create an institutional-grade Decentralized Finance entrance.

On November 25, Paxos, a blockchain infrastructure platform regulated by the New York Department of Financial Services, announced an acquisition of over $100 million for the DeFi wallet startup Fordefi. This acquisition will gradually integrate Fordefi's institutional-grade custody and longer computing wallet technology, providing Paxos's enterprise clients with safer access channels to decentralized finance services. Fordefi currently serves nearly 300 institutional clients, processing over $120 billion in transaction volume monthly, and this integration will significantly enhance Paxos's market position in the compliance DeFi sector.

Strategic Acquisition Analysis: Paxos's Decentralized Finance Layout and Compliance Ambition

The $100 million acquisition marks a strategic upgrade for Paxos in the Decentralized Finance space. Paxos CEO Charles Cascarilla emphasized in a statement, “The market demand for quality DeFi access in a secure environment is growing rapidly,” and the technology stack of Fordefi aligns perfectly with Paxos's goal of providing secure DeFi services. Notably, this is Paxos's second major acquisition in 2025 - earlier this year, the company acquired the Finnish electronic money institution Membrane Finance to expand its business presence in the European market, particularly under the MiCA regulatory framework.

From the perspective of the transaction structure, this acquisition adopts a gradual integration strategy. The Fordefi team will maintain independent operations, and its technology will gradually be integrated into Paxos' broader infrastructure. This arrangement ensures business continuity while allowing ample time for technological integration. Existing clients of Fordefi will not experience any disruption of service during the transition period, and this cautious integration approach reflects Paxos' high regard for the business stability of institutional clients.

From a strategic synergy perspective, Fordefi's core value lies in its institutional-grade custody solutions and Multi-Party Computation (MPC) technology. The MPC Wallet significantly enhances asset security by splitting private keys into multiple parts, each held by different participants. This technology is particularly well-suited for institutional clients requiring strict risk control, such as hedge funds, family offices, and large trading platforms. Compared to traditional single-point custody solutions, MPC technology greatly reduces single-point failure risks while maintaining convenience.

This acquisition is also an important measure for Paxos to cope with market competition. As competitors like Circle and Anchorage Digital continue to expand their service offerings, providing a complete DeFi entry point has become a battleground for institutional-level crypto infrastructure service providers. By integrating Fordefi's technology, Paxos is able to offer clients a one-stop service from custody, trading to DeFi yields, and this vertical integration strategy is expected to enhance its client stickiness and market share.

acquisition of key data and integration plan

Transaction amount: over 100 million USD

Completion date: November 25, 2025

For DeFi monthly volume: 120 billion USD

Number of institutional clients: nearly 300

Integration Method: Progressive Technology Fusion

Team arrangement: Fordefi maintains independent operation.

Regulatory Background: Paxos is regulated by the New York Department of Financial Services.

Deep Integration of Technology: How MPC Wallets are Reshaping Institutional DeFi Experience

Multi-Party Computation (MPC) technology is the core competitiveness of Fordefi and the value core of this acquisition. Unlike traditional private key management solutions, MPC enables multiple parties to jointly manage a blockchain address through distributed key generation and signing protocols, without any party having to hold the complete private key. This architecture solves the single point of failure problem and avoids the high Gas fees and operational complexity of multi-signature solutions, providing an ideal technical foundation for institutional participation in Decentralized Finance.

From a security architecture perspective, Fordefi's MPC Wallet achieves a perfect combination of off-chain signing and on-chain verification. Transaction authorization requires multiple pre-defined participants to collaboratively complete the signing process off-chain, and only the signed transactions are broadcast to the Blockchain network. This method not only protects the key shares of all parties from being leaked but also significantly reduces on-chain transaction costs. This efficiency improvement has substantial value, especially for institutional users who need to frequently participate in Decentralized Finance protocol interactions.

On the user experience level, Fordefi addresses multiple pain points for institutional participation in Decentralized Finance. Its policy engine allows institutions to set complex trading rules and risk control parameters, such as single transaction limits, authorized token lists, and suspicious address blacklists. At the same time, the complete audit trail functionality meets the compliance needs of institutional clients, allowing every transaction to be traced back to specific authorized personnel and decision-making processes. These features traditionally required institutions to develop internal systems themselves, but can now be integrated directly via API.

From the perspective of technological integration, Paxos is likely to first combine Fordefi's MPC Wallet with its existing stablecoin infrastructure. Imagine a scenario where enterprise clients make cross-border payments using stablecoins issued by Paxos, while securely participating in DeFi protocols through Fordefi technology to obtain additional returns. This combination not only creates new revenue streams but also improves the efficiency of client capital utilization, providing Paxos with a unique value proposition that differentiates it from traditional Financial Service providers.

Evolution of Market Structure: The Compliance Process of Institutional DeFi Services

The recent acquisition by Paxos reflects the rapid maturation of the institutional-grade DeFi service market. According to a report on digital asset institutional services published by McKinsey in 2025, the global institutional asset management scale for DeFi is expected to reach $250 billion by 2026, with a compound annual growth rate of over 150%. However, security concerns and regulatory uncertainty have been the main barriers preventing traditional institutions from entering on a large scale, and the combination of Paxos and Fordefi provides solutions specifically addressing these pain points.

From the perspective of the competitive landscape, the institutional DeFi service market is forming three main camps: traditional financial institutions (such as JPMorgan's Onyx division), pure crypto-native service providers (such as Fireblocks), and hybrid platforms like Paxos. Paxos has a natural advantage in compliance due to its special status regulated by the New York Department of Financial Services, and the technological capabilities gained through this acquisition allow it to compete in product innovation with crypto-native platforms.

Regulatory compliance is a core element of Paxos' strategy. As a trust company regulated by the New York Department of Financial Services, Paxos must adhere to strict capital requirements, cybersecurity standards, and customer asset protection regulations. After integrating Fordefi technology, Paxos is likely to embed these compliance requirements into the DeFi service process, such as ensuring that customers do not interact with sanctioned addresses through transaction monitoring systems, or setting risk exposure limits to prevent excessive leverage.

From a global market perspective, this acquisition aligns with the trend of regulatory development in various regions. The EU's MiCA regulation provides a clear framework for DeFi services, and the U.S. “21st Century Financial Innovation and Technology Act” is also under congressional review. These regulatory advancements create a more certain environment for institutional participation in DeFi. Paxos obtained an EU license through the acquisition of Membrane Finance, combined with the technology of Fordefi, enabling it to promote compliant DeFi services simultaneously in the European and American markets.

Customer Value Creation: Service Upgrade from Basic Custody to Yield Optimization

For existing enterprise clients of Paxos, the most direct value of this acquisition lies in the significant enhancement of the DeFi access experience. Traditionally, institutions wishing to participate in DeFi protocols have had to make difficult trade-offs between security, convenience, and compliance—either using less secure hot wallets or bearing the operational burden of complex multi-signature schemes. Fordefi's MPC technology essentially resolves this dilemma, allowing institutions to enjoy a seamless experience akin to retail users while maintaining the highest security standards.

From the perspective of service expansion, Paxos clients can now access a more complete digital asset service value chain. Taking the stablecoin business as an example, clients can not only issue US dollar tokens through Paxos but also securely deploy these tokens in various DeFi protocols using Fordefi technology to earn returns. This ability to extend from “issuance” to “appreciation” greatly enhances Paxos's strategic value as a Blockchain infrastructure platform and increases the switching costs for clients to migrate to other service providers.

Yield optimization is another key value proposition. In the traditional financial environment, idle cash in corporate treasury management typically only earns a low money market yield, whereas through secure access to DeFi, these funds may achieve significantly enhanced risk-adjusted returns. For example, by allocating some cash to high-quality liquidity mining or tokenized government bond products, companies can improve capital efficiency while managing risk.

For existing customers of Fordefi, joining the Paxos ecosystem also brings significant benefits. They can now more conveniently access Paxos's stablecoin issuance services and asset tokenization platform, which, combined with DeFi Wallets, create new application scenarios. More importantly, Paxos's regulatory compliance provides these institutions with additional security assurances, reducing the risk of business interruptions due to regulatory changes.

Industry Trend Outlook: The Acceleration of Integration Between Traditional Finance and Decentralized Finance

The acquisition of Fordefi by Paxos is a typical case of the accelerated integration of traditional finance and Decentralized Finance. This integration is reflected not only in the technological aspect but also in the evolution of business models and regulatory frameworks. From a technical perspective, privacy-enhancing technologies such as MPC are bridging the gap between institutional demands for security and DeFi's pursuit of accessibility; from a regulatory perspective, regulated entities like Paxos entering the DeFi space have promoted the formation of industry self-regulatory standards and best practices.

From the perspective of product evolution, institutional DeFi services are developing from simple yield generation to more complex structured products. For example, DeFi yield optimization combined with options strategies, lending protocols based on credit ratings, and tokenized derivatives that comply with securities laws. The combination of Paxos and Fordefi provides an ideal infrastructure for such innovative products—maintaining the transparency and efficiency of DeFi while meeting institutional requirements for risk management and compliance.

The trend of talent mobility also reflects this integration process. Quantitative analysts, risk managers, and compliance experts from traditional financial institutions are increasingly moving to crypto-native companies, while blockchain developers are also starting to learn about traditional financial products. This cross-sector talent flow accelerates the exchange of innovative ideas and promotes mutual understanding between two originally relatively independent fields. After the Fordefi team joins Paxos, this cultural and technical exchange will occur directly within the organization.

From an investment perspective, institutional-level DeFi infrastructure is becoming a new focus for venture capital. In the third quarter of 2025, cryptocurrency venture capital funds invested over $2.1 billion in trading platforms, custody services, and blockchain infrastructure projects, reflecting the market's high expectations for this field. Paxos' acquisition not only strengthens its market position but may also trigger a wave of similar consolidation, with other platforms potentially quickly filling their capability gaps in the DeFi space through acquisitions or collaborations.

When Paxos acquired Fordefi at a nine-digit price, it was far more than just an ordinary corporate acquisition. It symbolizes that institutional-grade crypto services are evolving from simple asset custody to a one-stop solution that encompasses issuance, trading, lending, and yield optimization. More importantly, it marks the transformation of DeFi from a playground mainly driven by retail and community governance into a market infrastructure that is regulated, institutionalized, and deeply integrated with traditional finance. For participants in this historic transition, the real challenge may not lie in the complexity of technological integration but in how to meet the stringent demands of institutions for security, compliance, and reliability while maintaining the core spirit of DeFi — this is the fundamental proposition that Paxos and Fordefi seek to address with their union.