- Paxos applies to convert its New York trust charter into a national trust charter with OCC, seeking broader federal regulatory oversight.
- The application follows a $48.5M NYDFS settlement over compliance failures linked to Binance, including $26.5M in fines.
- Ripple and Circle have also applied for similar licenses, facing resistance from major banking associations during the approval process.
Paxos has formally applied to convert its existing New York Department of Financial Services (NYDFS) trust charter into a national trust charter with the Office of the Comptroller of the Currency (OCC). This transition would bring the blockchain infrastructure and tokenization platform under direct federal supervision.
This move places Paxos alongside stablecoin issuers Ripple and Circle, which submitted similar applications more than a month earlier. The applications have drawn scrutiny from banking trade groups, including the American Bankers Association and the Independent Community Bankers of America, which have raised concerns during the approval process.
Focus on Regulatory Compliance
Paxos said the new charter would strengthen its commitment to high regulatory standards across global markets. The company already operates under regulatory frameworks in Europe, Singapore, and Abu Dhabi. It ensured that customer funds remain backed one-to-one by U.S. dollars, Treasuries, and cash equivalents.
The application comes shortly after Paxos settled compliance-related charges with the NYDFS. A Reuters report confirmed that Paxos agreed to pay $48.5 million to resolve allegations of failing to adequately monitor transactions tied to Binance.
Breakdown of the Settlement
The settlement included a $26.5 million civil penalty and $22 million earmarked for upgrading its anti-money laundering program. Paxos had been the issuer of the BUSD stablecoin, developed in partnership with Binance, but ceased issuing it in February following NYDFS directives.
Paxos stated that it had fully addressed the identified compliance shortcomings and that no customer accounts were impacted during the period in question. The company emphasized that operations will continue without disruption during the OCC application process.
The OCC national trust charter, if approved, would expand Paxos’ ability to operate under a unified federal framework, potentially streamlining its services across multiple U.S. states. The decision could also influence how other crypto firms approach compliance and licensing in a tightening regulatory environment.
