Paxos has reapplied for a US national trust bank charter after the expiration of its previous conditional approval in 2023. The company, known for supporting PayPal's PYUSD stablecoin, aims to convert its existing New York limited-purpose trust charter into a national trust bank charter, which would allow it to manage customer assets and settle payments nationally, thus enhancing its market appeal to institutional clients. Unlike traditional banks, a national trust bank is restricted from accepting cash deposits or issuing loans. Paxos first sought this charter in December 2020, receiving initial conditional approval in April 2021, but it lapsed in March 2023 without the bank becoming operational. Regulatory pressures intensified during this time, including a directive from the New York Department of Financial Services over compliance issues, which led Paxos to end its relationship with Binance. Recently, Paxos faced a fine of $26.5 million from NYDFS for alleged compliance failures. This renewed application coincides with the introduction of the GENIUS Act, which aims to establish a federal framework for stablecoin issuers, and follows similar applications from other entities in the crypto space.

Source 🔗