New York-based stablecoin developer Paxos Trust Company, has announced its intention to apply for a national trust bank charter in the United States, as reported by Reuters on Monday.
Paxos Joins Ripple And Circle In Pursuit
If granted by the US Office of the Comptroller of the Currency (OCC), the charter would empower Paxos to manage and hold customer assets while facilitating faster payment settlements.
However, the Reuters report notes that unlike traditional banks, the stablecoin development company would not be authorized to accept cash deposits or extend loans.
This transition would convert Paxos’ existing limited purpose trust charter from the New York Department of Financial Services into a federal charter under the OCC.
In an exclusive interview with Reuters, a source familiar with the situation said that this increased scrutiny could carry significant weight in the evolving landscape of digital finance.
Paxos previously attempted to secure a national trust bank charter in 2020, receiving preliminary conditional approval from the OCC in 2021 alongside firms such as Anchorage Digital and Protego Trust Bank. However, the application ultimately stalled and expired in 2023.
Currently, Anchorage Digital stands as the only digital asset company with a national trust bank charter, while other firms, including stablecoin issuer Circle (CRCL) and blockchain payments company Ripple, have also submitted applications for national trust bank charters in recent weeks.
$48 Million Settlement Over Binance Oversight Issues
Paxos plays a pivotal role in the cryptocurrency ecosystem by providing blockchain and stablecoin infrastructure. The company issues several stablecoins, including PayPal’s PYUSD, which boasts a market capitalization exceeding $1 billion.
The recent legislative advancements in the US have further propelled the stablecoin narrative. Last month, President Donald Trump signed into law the GENIUS Act, establishing a regulatory framework for stablecoins.
Such a significant milestone has prompted experts to believe it could pave the way for these dollar-pegged cryptocurrencies to become a standard method for transactions and money transfers.
This regulatory progress follows a concerted lobbying effort by the crypto industry, which reportedly contributed over $245 million to pro-crypto candidates during the previous election cycle.
Paxos has faced challenges in its partnerships as well. Earlier this year, New York regulators ordered the company to cease issuing Binance’s stablecoin, BUSD, leading to the termination of its partnership with the crypto exchange.
Additionally, Paxos recently settled for $48.5 million over charges related to inadequate oversight of illegal activities associated with Binance, following a guilty plea from Binance’s former CEO Changpeng Zhao (CZ), concerning violations of US anti-money laundering laws.
Featured image from DALL-E, chart from TradingView.com
