Paxos Renews US Charter Bid as Stablecoin Rules Shift

• Paxos seeks federal approval to convert its New York trust charter into a national trust bank charter.
• The reapplication could broaden Paxos’ institutional appeal amid evolving regulations.

According to a company announcement on August 11, Paxos Trust Company has reapplied to the Office of the Comptroller of the Currency (OCC) for a U.S. national trust bank charter. This effort renews an earlier application that received preliminary conditional approval from the OCC in April 2021, which later expired in 2023. If successful, the move would convert Paxos’ current New York limited-purpose trust charter into a federal charter, allowing the company to expand its asset custody and payment settlement services nationwide under federal oversight.

Securing a federal charter would allow Paxos to operate as a national trust bank under stringent federal guidelines, a status that would facilitate custodial and settlement operations on a national level and appeal to institutional clients. However, federal law restricts national trust banks from accepting cash deposits or issuing loans. In the announcement, Paxos CEO Charles Cascarilla emphasized that OCC oversight would enhance the company’s commitment to transparency and protection of consumer assets, thereby strengthening its ability to serve its clients.

Paxos’ previous attempt to obtain a national charter ended in 2023 when its conditional approval expired. The company attributed the expiration to not meeting certain conditions set by the OCC, but the New York Department of Financial Services (NYDFS) had reviewed its operations for compliance issues. In February 2023, the NYDFS ordered Paxos to cease issuing the Binance USD (BUSD) stablecoin, citing unresolved issues related to Paxos’s oversight of its relationship with Binance.

This reapplication comes in the context of new legislation, such as the Clarity for Payment Stablecoins Act, a regulatory framework for stablecoin issuers that encourages companies like Paxos to obtain federal charters for legal clarity and operational consistency. By pursuing a national trust bank charter, Paxos aims to position itself more strategically within the stablecoin sector and adapt to the evolving regulatory landscape.