Paxos Applies for National Trust Charter to Align With Traditional Banking Standards

Paxos Trust Company, the stablecoin issuer behind PayPal’s PYUSD, has submitted an application to the U.S. Office of the Comptroller of the Currency (OCC) for a national trust bank charter [1]. This move aligns the company more closely with traditional banking standards and follows recent regulatory shifts that have created a clearer legal pathway for stablecoin operations. The application aims to convert Paxos’s existing New York state trust charter into a nationally recognized one, granting it the regulatory oversight and credibility associated with traditional financial institutions [2].

A national trust charter would not permit Paxos to take deposits or issue loans, but it would allow the firm to hold customer assets, streamline settlement processes, and operate under a globally recognized regulatory framework. Industry observers suggest this could enhance trust and collaboration with banks, asset managers, and payment service providers seeking to integrate stablecoins into their operations [1].

Paxos is not the first stablecoin firm to pursue this regulatory route. Both Circle, issuer of USDC, and Ripple, issuer of RLUSD, have also filed for national trust charters. These applications come in the wake of the passage of the GENIUS Act, signed by President Donald Trump in July, which introduced the first nationwide rules for stablecoin issuers. The legislation is seen as a major step in legitimizing stablecoins as a mainstream financial tool, particularly for cross-border payments and digital commerce [3].

This regulatory push reflects a broader industry trend toward aligning with U.S. financial standards. Paxos previously sought a national trust charter in 2020 but saw the process expire in 2023. The renewed application signals a strategic commitment to securing a more robust regulatory foundation, potentially boosting consumer confidence and institutional adoption [4].

The implications of securing a national trust charter are significant. It would grant Paxos the ability to operate beyond state boundaries, increase the scalability of its stablecoin solutions, and strengthen its position in strategic partnerships such as the one with PayPal. It also highlights the increasing recognition of stablecoins as a legitimate financial asset class, with regulators starting to view them as a key component of the evolving digital finance ecosystem.

As the OCC evaluates applications from Paxos and its peers, the outcome could set a precedent for how stablecoin firms navigate federal oversight and influence the broader regulatory expectations for the industry. This shift toward standardized, federal-level regulation may help address concerns around transparency, consumer protection, and systemic risk that have historically surrounded cryptocurrencies.

By seeking federal status, Paxos and other stablecoin issuers are demonstrating a willingness to operate under the same rigorous standards as traditional banks. This alignment could play a crucial role in bridging the gap between crypto and conventional finance, fostering a more cohesive and transparent financial infrastructure for digital assets.

Sources:

[1] Stablecoin Issuer Paxos Follows Circle and Ripple in Applying, Yahoo (https://finance.yahoo.com/news/stablecoin-issuer-paxos-follows-circle-182044267.html)

[2] Stablecoin News: Paxos Joins Circle, Ripple Applying for, CoinDesk (https://www.coindesk.com/policy/2025/08/11/paxos-applies-for-national-bank-trust-charter-joining-stablecoin-issuers-circle-ripple)