TLDR
- Paxos has applied for a US national trust charter with the OCC, following similar moves by Circle and Ripple
- The approval would upgrade Paxos’ existing New York charter and allow nationwide operations under federal oversight
- Paxos previously received conditional approval in 2021 but let it expire in 2023 during regulatory pressure
- The company recently paid $48.5 million to settle charges related to its Binance partnership and BUSD stablecoin
- The applications come after new federal stablecoin legislation and improved regulatory clarity
Paxos has filed an application with the Office of the Comptroller of Currency (OCC) for a national trust charter. The move follows similar applications from stablecoin companies Circle and Ripple.
The stablecoin issuer behind PayPal’s PYUSD announced the filing on Monday. If approved, the charter would upgrade the company’s existing New York Department of Financial Services charter.
A national trust charter would allow Paxos to conduct business across all US states. The company currently operates under a New York limited-purpose trust charter it has held since 2015.
“OCC oversight will help build on our historic commitment to maintaining the highest standards of safety and transparency,” said Paxos co-founder and CEO Charles Cascarilla. The company believes federal designation will unlock new growth opportunities.
This marks Paxos’ second attempt at securing a national charter. The company first applied in December 2020 and received conditional approval in April 2021.
However, that approval came with an 18-month deadline to meet pre-opening requirements. Paxos failed to launch the bank before the March 31, 2023 expiration date.
Previous Charter Attempt During Regulatory Pressure
The expired approval coincided with mounting regulatory scrutiny. In February 2023, New York regulators ordered Paxos to stop issuing Binance USD over compliance concerns.
This forced the company to end its partnership with Binance. The relationship had allowed US customers to use the BUSD stablecoin illegally.
Last week, Paxos reached a $48.5 million settlement with New York State over the Binance partnership. The company will pay $26.5 million in fines and allocate $22 million for compliance upgrades.
The settlement resolved allegations that Paxos failed to maintain proper anti-money laundering controls. The violations occurred during its partnership with the crypto exchange.
New Federal Framework Drives Charter Applications
The renewed application comes after Congress passed the GENIUS Act. This legislation established the first federal framework for stablecoin issuers.
The OCC also announced in May that national banks can custody and manage crypto assets. This regulatory clarity has encouraged multiple stablecoin companies to seek federal oversight.
Circle and Ripple have also filed applications for national bank charters. The trend reflects growing institutional interest in regulated crypto services.
Unlike traditional banks, national trust banks cannot accept cash deposits or issue loans. They focus on custody services and payment settlement under federal oversight.
Based in New York, Paxos issues stablecoins including PayPal’s PYUSD and gold-backed PAXG. The company serves institutional clients including Mastercard, Interactive Brokers, and MercadoLibre.
The OCC has not announced a timeline for reviewing the application. Paxos continues operating under its New York charter while awaiting federal approval.