US OCC Grants A Banking Charter To Paxos To Create A Trust Bank

The Office of the Comptroller of the Currency (OCC) of the United States has given Paxos, a PayPal collaborator and a Stablecoin company, a national charter to form a trust bank in the country. This company will be the third crypto-based company that would receive such a charter from the OCC. The first company to receive this charter is Anchorage, while Protego was the second company, and now Paxos has joined the league of companies to hold such charter.

Quite different from the last two charters, there is a misleading label as it has to do with Paxos because it will not be handling deposits. Instead, the charter they received is labeled “FinTech Charter,” which is a type that was first received by Brian Brooks, the former acting comptroller of the Currency.

The charter received will permit Paxos to facilitate such activities as custody and management of the Dollar Stablecoin; custody services for digital assets; exchange, payment, and agent services; and other services related to the crypto space. These other services include enabling traders to buy and sell crypto amidst other trading activities; the KYC service, as captured in the letter Dan Burstein, the general counsel of Paxos, received from the OCC.

It was noted in the letter that all these services are currently being facilitated by the Paxos Trust Company, whose operation is based on the New York BitLicense. The new charter received, however, would permit the existence of a new entity in Paxos to become an organization regulated federally.

The letter from the OCC also noted that there is some certain resistance against the issuance of the charter from the conventional banking sector.

Paxos Approval Questioned

During the period of public comment, there was a letter received by the OCC signed by some trade groups in the representation of the banks. The letter argued that the activities proposed by Paxos are not in alignment with the precedent of the OCC regarding the fiduciary activities that the trust banks in the nation conduct. The letter also indicated that there was no detailed information about the business model of the bank.

This particular letter was countered by the OCC that they received well-detailed information before deciding to grant the charter, and the same is what determined the kind of approval that they granted the organization.

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