Paxos Trust Company, the issuer of USDP stablecoin, has once again applied to convert its New York limited-purpose trust charter into a U.S. national trust bank charter, which could significantly change the landscape of cryptocurrency.
Paxos' Application for National Bank License
Paxos Trust Company has officially filed a request with the Office of the Comptroller of the Currency (OCC) to convert its New York trust company license into a national trust bank charter. If approved, the company would be recognized as a federally regulated agency for asset custody and payment settlement across the U.S. However, unlike traditional banks, a national trust bank cannot take deposits or give loans.
Implications of the License on the Stablecoin Market
Should Paxos receive the national bank license, it will become a nationally regulated stablecoin issuer. This will place the company under OCC supervision, complying with the new GENIUS Act, which sets federal rules for stablecoin issuers. Such oversight could improve investor trust in cryptocurrencies and enhance market transparency.
Comparing Paxos' Positioning with Other Companies
Paxos is not the only company applying for the license. Ripple and Circle have also pursued approval, with all three companies following similar paths towards achieving national oversight for their products. The interaction with traditional financial institutions may have both positive and negative impacts on their efforts.
The resubmission of the bank license application signifies Paxos' intent to expand and strengthen trust in its product in the cryptocurrency market. However, existing challenges from traditional banking institutions could complicate this process.
