Paxos applies for a national trust charter seeking federal oversight after settling with New York regulators.
Ripple, Circle and Paxos now push for national licenses as crypto firms aim for broader regulatory compliance.
Paxos says customer assets stay safe and services continue during the shift to federal trust bank status.
Paxos has applied to convert its New York trust charter into a national trust charter. The firm submitted its application to the Office of the Comptroller of the Currency. This is after a recent settlement with the New York Department of Financial Services. Paxos faced scrutiny by regulators due to anti-money laundering deficiencies related to its previous partnership with Binance.
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The company stated that the application represents its emphasis on safety, transparency, and regulatory compliance. Paxos seeks to be a federally regulated organization to gain the confidence of institutions and consumers. It joins Ripple and Circle, which also applied for similar charters in recent months.
Regulatory Push Follows NYDFS Settlement
Paxos reached a $48.5 million settlement with NYDFS. The penalties stemmed from issues in its compliance practices while issuing the BUSD stablecoin. The firm had worked with Binance to distribute the token before halting operations in early 2023. The regulator found gaps in the firm’s anti-money laundering protocols during that time.
As part of the settlement, Paxos agreed to pay a $26.5 million fine. It also committed $22 million to enhance its compliance systems. The company said the issues were identified years ago and addressed. It confirmed that no customer funds were affected.
Federal Oversight Gains Industry Attention
Ripple and Circle applied for federal trust charters before Paxos. These applications reflect a broader shift in the stablecoin sector. Firms now seek consistent national oversight to meet growing expectations from regulators. So far, their applications have faced pushback from banking trade groups.
The American Bankers Association and the Independent Community Bankers of America have expressed concerns. They warned that allowing crypto firms access to trust bank status could pose risks to financial stability. Despite this, interest in federal charters continues to rise among blockchain companies.
Paxos Maintains Global Compliance Footprint
Paxos holds regulatory approvals in several international markets. These include Europe, Singapore, and Abu Dhabi. The company also issues two major stablecoins: Pax Dollar (USDP) and PayPal USD (PYUSD). Both tokens remain fully backed by reserves, including U.S. dollars and Treasury instruments.
The firm assured that customers will experience no service disruptions during the transition. Its reserves remain bankruptcy-remote and allow for 1:1 redemption. Paxos said the national charter will reinforce its commitment to secure blockchain infrastructure.
The application follows recent federal developments. A new law, the GENIUS Act, now sets a regulatory framework for stablecoins in the United States.
