Paxos Applies for U.S. National Trust Bank License to Expand Stablecoin and Custody Services

Paxos has reapplied for a U.S. national trust bank charter, a move that would allow it to hold customer assets and expand its stablecoin operations if approved.

Paxos Reapplies for U.S. Bank Charter

Paxos Trust Company has applied with the Office of the Comptroller of the Currency (OCC) to convert its New York Department of Financial Services trust charter into a national trust bank charter, aiming to manage digital assets for customers under federal oversight.  

According to Charles Cascarilla, Paxos Co-founder and CEO, oversight will help strengthen the historic assurance of maintaining the highest standards of safety and transparency.

The Crypto firm behind PayPal’s PYUSD Stablecoin had also previously applied for the charter in December 2020 and received a conditional approval in 2021, which expired on March 31, 2023,  after the company did not establish the proposed national trust bank within 18 months, according to the OCC rules.

In addition to acquiring federal oversight, Paxos continued operating under its limited-purpose New York trust charter during that period, which it had held since 2015.

Paxos Settles $48.5M as Stablecoin Rules Shift

Paxos and the New York Department of Financial Services (NYDFS)have reached a $48.5 million settlement over failure to uphold anti-money laundering rules in its work with Binance.

This comes also after NYDFS suspended the issuance of Binance USD by Paxos in February 2023, forcing it to end its relationship with Binance. The agreement includes a $26.5 million fine to the state of New York and the remaining $22 million for its compliance upgrade program. 

Coinciding with this is the first federal framework for stablecoin issuers established by the GENIUS Act, and a rapid trend of charter applications from Ripple and Circle for formal recognition under U.S. banking regulations.