Paxos Refiles US National Trust Bank Charter Application Amid Regulatory Shifts

Paxos Trust Company, the infrastructure firm behind PayPal’s PYUSD stablecoin, has refiled its application for a U.S. national trust bank charter with the Office of the Comptroller of the Currency (OCC), reviving an initiative that previously expired in March 2023. A federal charter would allow Paxos to custody customer assets and settle payments nationwide under federal oversight, potentially enhancing its appeal to institutional clients. This move comes after a $48.5 million settlement with the New York Department of Financial Services (NYDFS) related to compliance concerns and amid growing regulatory clarity in the stablecoin and tokenization space [1].

Paxos initially filed for the charter in December 2020 and received conditional approval in April 2021, but the authorization lapsed after 18 months due to delays in meeting operational requirements. During that time, the firm operated under its New York limited-purpose trust charter. The renewed effort was made in a regulatory environment marked by increased scrutiny, particularly following Paxos’ termination of its partnership with Binance in February 2023 and the subsequent NYDFS settlement [1].

The timing of the reapplication aligns with the recent enactment of the GENIUS Act—the first federal framework for stablecoin issuers. The act prohibits yield-bearing stablecoins, a provision that could indirectly stimulate capital flows into tokenized assets as institutions seek compliant ways to generate returns. Experts suggest this regulatory shift may accelerate the adoption of tokenization across various asset classes [1].

Former Standard Chartered executive and founder of Uniform Labs, Will Beeson, noted that the restriction on yield-bearing stablecoins will force institutions to seek alternative avenues to generate returns while maintaining liquidity. He predicts that trillions of dollars in stablecoins will eventually seek programmable access to risk-free yield and seamless conversion between cash and high-quality assets [1].

Paxos CEO Charles Cascarilla emphasized that OCC oversight would reinforce the company’s commitment to safety and transparency. Unlike traditional banks, national trust banks are not permitted to accept deposits or issue loans, but they are well-suited to support infrastructure for tokenized assets. The application also positions Paxos alongside other crypto firms, such as Ripple and Circle, which have similarly pursued federal banking charters [1].

Source: [1] Paxos Renews Push for US National Trust Bank Charter (https://coinpaper.com/10462/paxos-renews-push-for-us-national-trust-bank-charter)