Paxos Resubmits Trust Bank Charter Application Amid Regulatory Shift

Paxos Trust Company, the infrastructure provider behind PayPal’s PYUSD stablecoin, has submitted a new application to the Office of the Comptroller of the Currency (OCC) to convert its New York limited-purpose trust charter into a U.S. national trust bank charter. This marks a renewed effort to secure federal oversight after its initial conditional approval in 2021 expired on March 31, 2023, due to the 18-month regulatory window not being met [1].

A national trust bank charter would allow Paxos to custody customer assets and settle payments across the U.S. under federal supervision, a move that could significantly enhance its appeal to institutional clients. However, the charter would not grant the firm the ability to accept retail deposits or offer traditional lending services [2].

The company emphasized its commitment to maintaining high standards of safety and transparency under OCC oversight, according to a statement by CEO Charles Cascarilla. The new application aligns with a broader industry trend, as other major stablecoin issuers, such as Ripple and Circle, have also recently pursued federal banking charters [3].

Paxos’ renewed effort comes amid intensifying regulatory scrutiny, particularly from the New York Department of Financial Services (NYDFS). In February 2023, NYDFS ordered Paxos to halt the issuance of Binance USD over compliance concerns, leading to the termination of its partnership with Binance. Last week, the company reached a $48.5 million settlement with NYDFS related to alleged anti-money laundering shortcomings in its collaboration with Binance, which includes a $26.5 million fine and $22 million allocated to enhance its compliance program [4].

The timing of Paxos’ application is also notable. It follows the introduction of the GENIUS Act, which established the first federal regulatory framework for stablecoin issuers. The bill reflects growing legislative attention to stablecoins and highlights the need for a coherent, nationwide approach to crypto regulation [5].

The move underscores a strategic shift within the crypto industry, where firms are increasingly seeking integration into traditional financial systems through formal regulatory recognition. By pursuing a trust bank charter, Paxos aims to operate within a clearer legal framework, balancing innovation with oversight. The success of its application could set a precedent for others in the space and influence the broader evolution of stablecoin regulation in the U.S. [6].

Source: [1] https://www.ainvest.com/news/paxos-resubmits-national-trust-bank-charter-application-2508/

[2] https://www.thestar.com.my/tech/tech-news/2025/08/11/exclusive-paxos-joins-spate-of-crypto-companies-applying-for-us-trust-bank-licenses

[4] https://coinmarketcap.com/community/articles/689a657d790b292b8ac6bff3/

[5] https://crypto.news/senator-warren-warns-current-crypto-regulation-could-blow-up-economy/

[6] https://cryptodnes.bg/en/news/others/