- Paxos joins Circle and Ripple to apply for a US banking charter.
- The company issues stablecoins for clients, including PayPal.
- Only one crypto company holds a US banking charter.
Paxos, the company that issues PayPal’s $1 billion stablecoin, has applied for a national trust bank charter in the US, becoming the latest crypto company to pursue becoming a Federally-regulated bank in the US.
It’s a move that could give Paxos a gloss of establishment respectability, and a direct presence in America’s financial sector. If approved, Paxos will be able to operate across the US without navigating the patchwork of local banking licences.
However, while an approval would allow Paxos to hold customer assets and settle transactions, it won’t act as a traditional lender that can accept deposits and issue loans.
Paxos’ charter application comes at a time when Washington, under the Trump administration, has warmed up to crypto.
In July, President Donald Trump signed the Genius Act into law, effectively legalising stablecoins in the US.
Circle and Ripple
Paxos is the latest crypto company to pursue banking charter status. Circle and Ripple both applied earlier this summer. Chris Colson, payments guru at the Atlanta Federal Reserve, told DL News that an approval would enhance trust in their respective stablecoins.
“It potentially paves the way for broader institutional and cross-border adoption,” he said.
Yet, those US banking charter ambitions rely on the hope that the regulatory thaw has extended to the US Treasury Department’s Office of the Comptroller of the Currency, the agency that licenses and supervises all national banks.
An OCC charter has been a tough nut to crack for crypto companies. Only one firm, Anchorage Digital, has been able to scale the process.
Paxos itself tried to obtain a national bank charter in 2020 but its application stalled and expired in 2023.
Earlier in August, the stablecoin issuer settled with the New York Department of Financial Services for $26.5 million over its alleged failure to conduct due diligence on Binance.
Paxos was the issuer behind Binance’s BUSD stablecoin, which once peaked at $23 billion in market value.
Crypto market movers
- Bitcoin is down 1.4% over the past 24 hours and is trading at $118,433.
- Ethereum is up 2.6% in the same period to $4,295.
What we’re reading
- Trump Media brings Truth token plans into the open in latest SEC filing — DL News
- White House Crypto Advisor Bo Hines Steps Down — Unchained
- Do Kwon May Plead Guilty in US Case Over $40 Billion Terraform Collapse — Bloomberg
- Ether Breaks $4,000 as Spot ETFs Get Massive Inflows — Unchained
- Crypto law bonanza raises concerns around whether agency staff can regulate groundswell — DL News
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com. — DL News
