The U.S. Currency Control Authority (OCC) today granted stablecoin and a PayPal Paxos associate a federal charter to create a national trust bank – the third such charter that the OCC has provided to crypto-native companies.
As with the previous two charters, the “bank” label is somewhat misleading in that Paxos will not handle deposits immediately. Instead, they received a “Fintech Charter” – the type of bank charter that was promoted by former incumbent currency controller Brian Brooks.
The Charter allows Paxos to conduct activities such as “digital asset custody services; custody and management of USD stable reserves; payment, exchange and other agent services; other cryptocurrency services, such as business services and enabling partners to buy and sell cryptocurrencies; and “get to know your customer” as a service, “to a letter of approval from the OCC sent to Paxos General Representative Dan Burstein.
The letter states that all these activities are currently carried out by the Paxos Trust Company operating in New York BitLicense; the charter allows the new Paxos entity to become a federally regulated organization.
The OCC letter also suggests that there is some opposition to the issuance of a charter from the traditional banking sector.
During the public comment period, the OCC received a “letter signed by a number of business groups representing banks” arguing that “the proposed activities do not comply with the OCC’s precedent for fiduciary activities carried out by national trust banks” and that “the application does not provide sufficient information on the bank’s business model . “
However, the OCC argued that “they had received sufficient information to make an informed decision” and finally stated that “it is appropriate to grant prior conditional consent to allow the organizers to continue to organize the bank”.
The approval follows a number of significant Paxos victories. In December, the company received $ 142 million in funding, and in April applied for a clearing license after and a successful pilot to settle stablecoins on the same day with Credit Suisse, including institutions.