The crypto firm Paxos, applied for a national bank charter and if they get the application approved, Paxos could become the first digital asset custodian that has a national trust bank charter so let’s find out more in today’s crypto news.
The crypto firm Paxos, applied for a federal bank charter and there are no federally regulated “crypto banks” yet but several other companies applied for charters. The Acting Comptroller of the OCC encouraged crypto companies to apply for a national charter as well. Paxos is a stablecoin provider and digital asset company that applied for a US national trust bank charter with the Office of the Comptroller of the currency.
If successful, Paxos which is already regulated as a trusted company in New York, will be the first custodian of digital assets to be regulated at federal and state level as the General Counsel Dan Burstein wrote in a blog post. The resultant Paxos National Trust will be a subsidiary of Kabompo Holdings which is incorporated in the Cayman Islands. Paxos already does a little bit of everything since it offers cash and stablecoin custody services, allows trading of crypto through its itBit exchange, launches stablecoins, and uses tokenized settlements for commodities trading. The New York charter enables it to provide more fiduciary services.
In the OCC filing, Paxos said It will:
“conduct only certain activities that are currently conducted by Paxos’s New York state-chartered trust company and supervised by the [New York Department of Financial Services]” as well as “Other activities conducted by Paxos affiliates may be migrated to Paxos National Trust over time based on operational, financial and legal considerations.”
The filing doesn’t mention the business with PayPal as the payments company tapped Paxos Crypto brokerage back in October in order to provide crypto trading and custody services for BTC, ETH, LTC, and Bitcoin Cash within the PayPal app. Paxos has plenty of competition among the crypto companies but it could be the first bank that has a national charter. BitPay and Anchorage have applied for federal banking charters as well. The current head of OCC Brian Brooks indicated that the national trust bank charters are a one way for crypto businesses which are regulated at the state level and operate nationally without getting a money transmission license. He said:
“If we have crypto banks, which I think we will very shortly, I think it is in their interest they will have to comply with one set of rules nationwide, that’s the way markets grow.”
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