Paxos joins Ripple and Circle in pursuit of US trust bank licenses

Paxos Trust Company, a New York–chartered company that builds blockchain-based infrastructure for tokenized assets and stablecoins, submitted an application to the US Office of the Comptroller of the Currency (OCC) for a US national trust bank charter, Reuters reported Monday.

With this move, the company joins other crypto-native firms, including Ripple and Circle, in seeking banking licenses that would help them gain federal regulatory legitimacy and solidify the regulatory foundation of their stablecoin businesses.

Likewise, the charter would offer the “highest level of regulatory oversight,” which holds greater influence both in the US and worldwide, a source with knowledge of Paxos’ move told Reuters.

If approved, the OCC charter would let Paxos hold customer assets and handle payments more quickly. Paxos would also switch from its current New York state trust charter to a federal one.

Paxos first applied for a national trust bank charter in December 2020 and received preliminary conditional approval from the OCC in April 2021. The charter would let Paxos offer services like custody, fiduciary duties, and stablecoin reserve management.

However, the application faced criticism for lacking traditional trust bank activities, prompting calls for greater regulatory scrutiny. In early 2023, Paxos faced a probe by the New York State Department of Financial Services (DFS).

Ultimately, the application expired by March 31, 2023, leaving Anchorage Digital as the only digital asset firm with an active national trust bank charter.

The announcement follows Paxos’ recent settlement with the DFS over anti-money laundering compliance violations and mistakes in their due diligence related to their past work with Binance. The settlement includes a $26.5 million civil fine and $22 million designated for improving compliance systems over the next three years.