Paxos Makes Landmark Play for National Trust Charter from OCC

In a renewed, high-stakes bid for federal legitimacy, PayPal’s stablecoin issuer, Paxos Trust Company, applied on Monday for a national trust charter, escalating the regulatory race against rivals Circle and Ripple.

If approved, the charter would upgrade the firm’s New York license to a federal one, placing it under direct OCC oversight and allowing it to operate nationwide with greater regulatory credibility.

From State Limits to National Reach: Paxos eyes OCC approval

Paxos has operated under the NYDFS regime since 2015, when it became the first blockchain and tokenization platform to receive a limited purpose trust charter. That license allowed Paxos to issue regulated products, including the first regulated stablecoin in 2018, but limited to New York and states with reciprocal agreements.

Applying for a national trust charter, Paxos is seeking to lift its New York-only restrictions, granting it nationwide authority without the need for separate state licenses, while also strengthening its reputation through unified OCC oversight and opening the door to possible access to federal payment networks.

Notably, OCC supervision might cement Paxos as one of the most heavily regulated blockchain entities globally, a factor the company believes will appeal to major financial institutions considering stablecoin and tokenization solutions. “By applying for a National Trust Bank charter, we are continuing to offer enterprise partners and consumers the safest, most trusted infrastructure available,” said Paxos’s CEO Charles Cascarilla.

The timing coincides with the recent passage of federal stablecoin legislation under the GENIUS Act, which set a clearer regulatory framework for digital dollar-pegged assets. Paxos says this alignment between federal rules and its own compliance history creates “a crucial moment to scale our services nationally.”

Under a multi-jurisdictional framework, Paxos already operates with oversight from the Monetary Authority of Singapore (MAS), the Financial Supervisory Authority in Europe (FIN-FSA), and the Financial Services Regulatory Authority (FSRA) in Abu Dhabi.

In Cascarilla’s view, it’s the next logical step in building infrastructure that “powers financial freedom through blockchain” while meeting the demands of increasingly stringent global regulators.

OCC Charters Become the Latest Prize in Crypto’s Expansion Push

Paxos’ OCC application follows similar moves from Circle and Ripple, two other high-profile stablecoin and blockchain firms seeking national trust bank charters.

But so far, Anchorage Digital remains the only active crypto entity with an OCC national trust charter, granted conditionally in January 2021. Anchorage’s experience shows both the potential and pitfalls of the model; while its charter enabled expanded crypto-native services, compliance lapses around AML triggered an OCC consent order in 2022.

The hurdles of securing and maintaining a national charter are steep. Not all past applicants fared well; both Protego Trust and the earlier Paxos application failed to meet OCC expectations and ultimately expired.

Meanwhile, lobbying groups such as the American Bankers Association, along with four other major trade groups, have raised strong objections to new crypto charter applicants.

In a July 17 letter, the groups argued that the public portions of these applications lack sufficient detail for meaningful scrutiny, urging the OCC to release more information on business plans before proceeding. They warned that granting such charters, which do not involve insured deposits or lending, would represent a significant policy shift that warrants deeper public input.

This year, Paxos has expanded its footprint through partnerships with Mastercard, Interactive Brokers, and MercadoLibre, while continuing to issue and manage stablecoins like PayPal’s PYUSD and gold-backed PAXG. Paxos once collaborated with Binance, the world’s largest cryptocurrency exchange, to issue and distribute the Binance USD (BUSD) stablecoin.

In early 2023, the New York Department of Financial Services ordered Paxos to halt BUSD issuance, prompting the company to terminate the partnership.

Just last week, Paxos agreed to pay $48.5 million to settle New York State charges alleging it failed to adequately monitor illicit activity tied to Binance. The settlement follows Binance’s former CEO pleading guilty to U.S. anti-money laundering violations as part of a $4.3 billion resolution reached in 2023.

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