Paxos Reapplies for U.S. National Trust Bank Charter to Expand Operations

Paxos Trust Company has submitted an application to the Office of the Comptroller of the Currency (OCC) for a national trust bank charter, marking a renewed effort to secure federal oversight after its conditional approval in 2021 expired in 2023 [1]. The move is part of a broader trend among stablecoin issuers, including Circle and Ripple, to seek formal recognition under U.S. banking regulations to enhance credibility and scalability [2].

The application follows Paxos’s initial 2015 acquisition of a limited-purpose trust charter from the New York Department of Financial Services (NYDFS), which allowed the company to operate primarily within New York and states with reciprocal agreements [2]. By transitioning to a national trust charter, Paxos aims to eliminate geographic limitations and operate nationwide with a single federal license [2]. This aligns with the company’s long-term mission to deliver “the safest, most trusted infrastructure available” to enterprise partners and consumers [3].

The application does not involve new funding, asset restructuring, or immediate market disruption [1]. Instead, it focuses on enhancing operational efficiency and expanding the reach of Paxos-issued stablecoins like USDP and PYUSD, which could appeal to institutional clients seeking stronger security and compliance assurances [1]. Federal oversight may also streamline the company’s role in digital asset custody and payment processing, potentially setting a precedent for the integration of crypto infrastructure into the traditional financial system [5].

Paxos CEO Charles Cascarilla emphasized the significance of the charter, stating that it would “help build on our historic commitment to maintaining the highest standards of safety and transparency” [1]. The timing of the application coincides with the recent passage of the GENIUS Act, which established clearer regulatory guidelines for stablecoins pegged to the U.S. dollar [4]. This legislative development could support Paxos’s efforts to expand its operations nationally.

However, the application process is expected to involve rigorous scrutiny from the OCC, and past attempts—such as Protego Trust’s failed application—highlight the regulatory challenges involved [5]. Industry groups have also raised concerns about the transparency of applications and the broader policy implications of granting charters to crypto-focused entities [5]. Despite these challenges, Paxos has continued to expand its operations through partnerships with major financial institutions and remains active in managing stablecoins for clients such as PayPal and MercadoLibre [6].

The outcome of this application could have significant implications for the crypto sector, particularly in terms of regulatory alignment and institutional adoption. If approved, it would mark a key step toward formal recognition of blockchain infrastructure under U.S. federal banking rules [5].

Sources:

[1] Paxos to Pursue National Trust Charter with the Office of the Comptroller of the Currency (https://www.paxos.com/newsroom/paxos-to-pursue-national-trust-charter-with-the-office-of-the-comptroller-of-the-currency)

[2] Paxos Seeks U.S. National Trust Charter as Stablecoin Firms Eye Banking Status (https://cryptodnes.bg/en/paxos-seeks-u-s-national-trust-charter-as-stablecoin-firms-eye-banking-status/)

[3] Stablecoin Issuer Paxos Follows Circle and Ripple in Pursuing U.S. Bank Charter (https://decrypt.co/334534/stablecoin-issuer-paxos-follows-circle-ripple-applying-us-banking-license)

[4] Paxos Reapplies for U.S. Trust Bank Charter Amid Crypto Regulatory Shift (https://www.ainvest.com/news/paxos-reapplies-trust-bank-charter-crypto-regulatory-shift-2508/)

[5] Stablecoin Issuer Paxos Applies for National Trust Charter as Competition Heats Up (https://www.financemagnates.com/cryptocurrency/stablecoin-issuer-paxos-applies-for-national-trust-charter-after-circle-ripple/)

[6] Paxos Renews High-Stakes Bid for National Trust Bank Status in U.S. (https://blockonomi.com/paxos-renews-high-stakes-bid-for-national-trust-bank-status-in-u-s/)