The US Office of the Comptroller of the Currency (OCC) today awarded Paxos, a stablecoin corporation and PayPal partner, a federal charter to create a national trust bank, making it the third such charter issued by the OCC to crypto-native businesses.
Paxos joins Anchorage, the first custody company to obtain a charter in January, and Protego, another custodian, which acquired a provisional charter in February.
As with the previous two charters, the label “bank” is misleading since Paxos would not be accepting deposits right away. Instead, they were granted a “Fintech Charter,” a sort of banking license pioneered by former acting Comptroller of the Currency Brian Brooks.
According to an approval letter from the OCC sent to Paxos general co-founder, the charter allows the company to carry out activities including:
“custody services for digital assets; custody and management of USD stablecoin reserves; payment, exchange, and other agent services; other cryptocurrency services, such as trading services and enabling partners to buy and sell cryptocurrency; and “know your customer” as a service,”
The Paxos Trust Company, which operates under a New York BitLicense, is actually doing all of these operations, according to the letter; the charter requires a new Paxos corporation to become a federally controlled agency.
The letter from the OCC also suggests that the conventional banking industry was opposed to the charter’s issuance.
The OCC obtained a “letter signed by a number of trade associations representing banks” during a public feedback time, alleging that:
The OCC, on the other hand, said that they had “received adequate details to make an informed decision” and that it was “appropriate to give provisional conditional approval to enable the organizers to continue with the Bank’s organization.”
Paxos has recently earned a slew of high-profile awards. Following a profitable pilot of same-day stablecoin settlement with Credit Suisse and other banks, the firm raised $142 million in a funding round in December and applied for a clearing license in April.
The stablecoin issuer has obtained a banking license, although this does not imply that they can engage in conventional banking activities.