Paxos National Trust has been granted preliminary conditional approval for a national trust bank charter from the Office of the Comptroller of the Currency (OCC).
This news means that the OCC has reviewed the firm’s intentions for Paxos National Trust and indicated that the initial plans meet their standards. Now, Paxos will execute on those plans to create the National Trust Bank.
The federal banking system includes nearly 1,200 national banks, federal savings associations, and federal branches of foreign banking organizations operating in the United States that range in size from 1,000 smaller community banks under $10 billion in assets focused on meeting local needs to the largest internationally active banks.
These banking companies conduct a wide array of businesses that range from retail and wholesale banking activity to trust, credit card and other more narrowly focused services. The institutions that make up the federal banking system conduct approximately 70 percent of the banking activity in the United States, hold more than $14 trillion in assets combined, and manage more than $60 trillion under their custody and fiduciary control.
The preliminary approval followed a thorough review of the company and its current operations, according to the parties. The same rigorous review and standards applied to all charter applications.
“This makes Paxos the first crypto-native company to receive preliminary conditional approval for a de novo national Trust Bank charter”, said the firm in a statement. “While other digital asset companies have received the greenlight to convert to a national trust bank, Paxos is the first to maintain its current regulatory structure (i.e. Paxos will retain our New York Department of Financial Services state Trust charter) and also seek a new federal charter.”
Paxos is retaining its NYDFS-regulated Trust company and has no plans to change that for the significant benefits in having both a nationally and state-regulated bank.
“Our clients and potential partners are some of the most sophisticated financial and tech institutions in the world. They are accustomed to working with the best of the best. With separate oversight and jurisdiction on both levels, Paxos implicitly demonstrates just how our operations meet higher standards than others in our field. Importantly, Paxos will provide its clients with product choices and clear solutions that fit their individual needs”, the firm stated.
The company behind the PAX stable coin, has obtained a license from the New York State Department of Financial Services in order to offer a gold-backed virtual currency, the first such virtual currency authorized by DFS, as well as BUSD, a virtual currency pegged to the U.S. dollar.
In 2015, the firm was granted a charter from the NYDFS so it could offer regulated services in the cryptoasset space through its cryptocurrency exchange itBiit Exchange. The license allowed the operator to offer services for buying, selling, sending, receiving, and storing virtual currency.
The New York regulator also authorized Paxos to offer its first asset-backed token in September 2018. The stablecoin, which is pegged to U.S. dollars, is known as Paxos Standard (PAX).