Paxos Trust Company has reapplied for a US national trust bank charter, seeking to convert its New York limited-purpose trust charter into a federal license as new stablecoin regulations take shape. The move revives an effort that first began in 2020 but lapsed last year.
If approved by the Office of the Comptroller of the Currency (OCC), the charter would allow Paxos to custody customer assets and settle payments nationwide under federal oversight, a step expected to strengthen its appeal to institutional clients. Unlike traditional banks, national trust banks cannot accept cash deposits or issue loans.
“OCC oversight will help build on our historic commitment to maintaining the highest standards of safety and transparency,” said Charles Cascarilla, Paxos co-founder and CEO.
Paxos first received conditional OCC approval in April 2021, following its December 2020 application. The approval allowed the company to work toward opening the bank by meeting capital, compliance, and operational requirements. However, under OCC rules, conditional approvals expire in 18 months if a bank is not launched, and Paxos’s approval lapsed on March 31, 2023.
During this period, Paxos operated under its New York limited-purpose trust charter, which it has held since 2015, while signaling its intent to seek federal oversight when conditions were favorable.
The company’s regulatory journey has not been without setbacks. In February 2023, the New York Department of Financial Services (NYDFS) ordered Paxos to halt issuance of Binance USD (BUSD) due to compliance concerns. That scrutiny culminated in a $48.5 million settlement last week, including $26.5 million in fines and $22 million allocated to strengthen its compliance program.
Paxos’s renewed application comes just weeks after the GENIUS Act introduced the first federal framework for stablecoin issuers and amid a wave of charter applications from rivals like Ripple and Circle. Industry analysts say the timing could position Paxos to leverage growing regulatory clarity while competing for institutional trust in an evolving digital asset market.
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