Paxos is taking another shot at securing federal approval to become a U.S. national trust bank, a move that could place it among a small but elite group of crypto firms under Office of the Comptroller of the Currency (OCC) supervision.
The New York-based blockchain infrastructure firm, known for powering PayPal’s PYUSD stablecoin, has applied to convert its state-issued limited-purpose trust charter into a federal charter. If approved, the status would allow Paxos to custody digital assets and settle payments nationwide without becoming a traditional deposit-taking bank.
“Ensuring oversight by the OCC will help pave the way for further commitment of high levels of safety and transparency,”
— Charles Cascarilla, CEO of Paxos
A Second Attempt at the Charter
This is not Paxos’ first federal bid. The company received conditional approval from the OCC in April 2021 after applying in December 2020, but the green light expired in March 2023 when it failed to open a bank within the required 18 months. At the time, market volatility and regulatory uncertainty put plans on hold.
Regulatory Turbulence and Settlement
The setback coincided with scrutiny from the New York Department of Financial Services (NYDFS), which in February 2023 ordered Paxos to halt the issuance of Binance USD (BUSD) over compliance concerns.
Last week, Paxos reached a $48.5M settlement with the NYDFS—including a $26.5M fine and $22M for compliance enhancements—resolving allegations of anti-money laundering control deficiencies tied to BUSD.
A New Federal Stablecoin Framework
This renewed push comes after the GENIUS Act established a first-of-its-kind federal framework for stablecoin issuers. Observers expect more companies—like Ripple and Circle—to follow Paxos’ lead in pursuing an OCC charter.
If successful, Paxos could strengthen its appeal to institutional clients seeking a combination of blockchain innovation and rigorous regulatory oversight.
