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Paxos Receives Preliminary US Federal Banking Charter Approval from OCC

UTC by Oluwapelumi Adejumo · 3 min read
Paxos Receives Preliminary US Federal Banking Charter Approval from OCC
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Paxos hopes to be at the forefront of that wave of regulation and the recently gained approval is one more step along that road.

The crypto giant Paxos received preliminary conditional approval from the US Office of the Comptroller of Currency (OCC) on Friday. Paxos joins Anchorage and Protego in holding a federal banking charter, which allows them to carry out custodial and management services for digital assets, stablecoin reserves, and crypto-based services like payments, trade, KYC, and exchange.

Paxos, a blockchain infrastructure platform, is focused on building a regulated open financial ecosystem. Regulation is a big deal for Paxos, as the company strives for acceptance in traditional financial markets of the US. Already, Paxos holds a New York BitLicense, allowing them to trade freely within the US, but this new charter allows them to operate a new trust alongside the BitLicense trust.

Paxos’s new structure of two separate trusts, one national and one state level are the first of this kind. When Anchorage and Protego got applied for their charters, they attempted to convert their state trust to a national one. However, Paxos will run both trusts separately to give their investors a more diverse array of options while maintaining the regulatory infrastructure of BitLicense.

Following the Rules, Paxos Isn’t Afraid of Regulation

The Federal Bank Charter does not confer actual banking status upon any financial entity that receives it. The charter is designed explicitly for FinTech and was initially pioneered by Brian Brooks, former Currency Comptroller of the US. It allows holders of the charter to act as “Bitcoin Banks,” which do not work as cash banks work. Instead, they work exclusively with digital assets and offer digital services.

Several fiduciary and financial entities have come forward to oppose the awarding of the Federal Banking Charters to crypto entities. The OCC received complaints from trade groups and banks who argued that the activities of crypto companies do not align with the traditional market, adding that the documentation submitted by crypto entities does not contain sufficient information on their business models.

With these dissenters challenging the authority of the OCC over the fiduciary and financial activities of National Trust banks, the current acting Comptroller of Currency, Blake Paulson, seems to hold the same sentiments on crypto as his predecessor, the Offices’ decision to allow crypto companies apply for regulation, could be the beginning of long clamored for regulation for crypto companies in the US,

Paxos hopes to be at the forefront of that wave of regulation, their recently gained approval from the OCC is one more step along that road. Regulation can be a massive boost for companies looking for healthy investors. Paxos’s reputation for regulation and safety has done just that, with a $142 million funding round in December 2020 and an even more recent pilot of Stablecoin clearances with Credit Suisse.

Cryptocurrency news, News
Oluwapelumi Adejumo

Oluwapelumi is a believer in the transformative power Bitcoin and Blockchain industry holds. He is interested in sharing knowledge and ideas. When he is not writing, he is looking to meet new people and trying out new things.

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