Paxos earns provisional trust charter via the US Office of the Comptroller of the Currency and now became the third regulated crypto bank as we can see more in our latest crypto news today.
Stablecoin issuer and blockchain startup Paxos became the third biggest crypto company to score the federal trust charter through the US Office of the Comptroller of the currency and the national bank regulator even announced that it granted Paxos a preliminary charter that allows the company to bring its Paxos National Trust entity online as a federally regulated Entity offering custody services, payment, exchange, and other services.
With the approval, Paxos earns a license and joins Anchorage and Protego to become the third regulated crypto bank while Kraken and Avanti became state-regulated crypto bank entities after securing the Special Purpose Depository Institution charters in Wyoming. The move is a clear sign that the global crypto ecosystem is now becoming even more acceptable to regulators that have been wary of the nascent industry. In particular, the preliminary approval indicated that the OCC is comfortable with Paxos as a custodian which is very important for the industry that is prone to hacks or scams.
Becoming an OCC-regulated trust is a way for exchanges to operate across the world without needing a secure-state level license in 49 different states. The Paxos General Counsel Dan Burstein noted:
“This is a preliminary conditional approval, which means that the OCC is approving our business plan. It’s deeming the activities that we have identified in the business plan to be those that can be carried out by a national trust, that we have the right team in place and the right controls and plan in place to control our risk and to operate as a national trust company.”
Paxis has about a year to execute its business plan and show the OCC that it can operate safely. The regulator will evaluate the operations of the platform and will determine whether it will sign off on the final charter. At the moment, Paxos’ business plan doesn’t stray far from the operations that include its stablecoin-as-a-service offering, exchange, and custody products with crypto brokerage services.
Paxos filed with the OCC back in December and will now set up the Paxos national trust to operate under the OCC charter while maintaining the New York Department Of Financial Services Paxos Trust Co, as Burstein said:
“Our business is not going to change immediately because of this. We’re going to continue operating our existing business through our New York trust.”