U.S. Trust Bank Licensing Application Submitted by Paxos with OCC
In a significant move, Paxos, a digital asset platform, has reapplied for a U.S. national trust bank charter with the Office of the Comptroller of the Currency (OCC). The company aims to convert its existing New York limited-purpose trust charter into a federally regulated national trust bank charter.
If successful, Paxos would be authorized to hold and manage customer assets under federal oversight, enhancing its regulatory status and potentially instilling greater confidence among institutional clients. As a nationally chartered entity, Paxos would also be able to settle payments nationwide efficiently.
However, it's important to clarify that this national trust bank charter does not permit Paxos to accept traditional cash deposits or issue loans, setting it apart from conventional banks. While one source suggests that the new license might allow Paxos to accept cash deposits and offer loans under federal regulation, multiple other reputable sources and official explanations emphasize that a national trust bank charter (distinct from a full national bank charter) does not permit accepting deposits or issuing loans.
In summary, Paxos' national trust bank charter would allow for federally supervised asset custody and payment settlement, but not acceptance of cash deposits or loan issuance. The company continues to operate under its New York limited-purpose trust charter in the interim.
Table: Capabilities and Status Under Paxos' National Trust Bank Charter
| Capability | Status Under Paxos' National Trust Bank Charter | |------------------------------------------|-----------------------------------------------------| | Hold and manage customer assets | Allowed, under OCC federal oversight | | Accept cash deposits | Not permitted | | Issue loans | Not permitted | | Settle payments nationwide efficiently | Allowed |
The pursuit of a national trust bank charter is part of a broader trend among digital asset platforms and companies aiming for banking licenses in the United States. Notably, Circle, a publicly-traded stablecoin issuer of USDC, and Ripple, the company behind XRP and Ripple USD stablecoin, have also filed for national trust bank charters in the United States.
The OCC oversight, if granted, will add to the regulatory milestones in Europe, Asia, and other regions, including the Finnish Financial Supervisory Authority, the Monetary Authority of Singapore, and Abu Dhabi Global Market's Financial Services Regulatory Authority.
Paxos CEO, Charles Cascarilla, commented on the fresh application, stating it's rooted in the belief in blockchain's transformative power for financial freedom. The application process remains pending, and if approved, will mark a significant step forward in the regulation of digital asset platforms in the U.S.
- With the ambition of expanded regulatory status, Paxos, the digital asset platform, has reapplied for a national trust bank charter, hoping to convert its existing charter under the Office of the Comptroller of the Currency (OCC).
- If successful, Paxos would be allowed to hold and manage customer assets under federal oversight, a capability that could potentially attract institutional clients.
- However, it's crucial to understand that this national trust bank charter does not permit Paxos to accept traditional cash deposits or issue loans, distinguishing it from conventional banks.
- As part of a broader trend, other digital asset platforms like Circle (USDC issuer) and Ripple (behind XRP and Ripple USD stablecoin) have also filed for national trust bank charters in the United States, aiming to leverage federal oversight in their operations.
