According to recent reports, Paxos, based in New York, has received a Federal Bank Charter from OCC. The Office of the Comptroller of the Currency handles the banks of the nation. But Paxos is not the first crypto entity to acquire conditional approval from the OCC. Moreover, Anchorage and Protego both acquired approvals from the bank regulator earlier this year. It is, nevertheless, the first to gain acceptance for a “de novo” application, which enables it to establish an entirely new bank. Eventually, Paxos intends to run two trusts by the end of next year. It involves one under a national bank charter, one under a New York BitLicense.
Additionally, when Anchorage and Protego filed for bank status, they attempted to change their state-regulated entity to a federally regulated entity, giving up their earlier structure as a state trust. Nevertheless, Paxos’ de novo application suggests establishing an entirely new bank in accession to its prevailing trust, a BitLicense from the NYDFS (New York Department of Financial Services). Once the national trust is done and working, which Paxos can take up to 18 months to fulfil as per the terms of the conditional charter, there will be two distinct Paxos trusts.
Paxos has Good Relation with NYDFS
Moreover, Paxos has to execute the business plan presented to the OCC over the next 18 months to satisfy its conditional approval. The regulator will then evaluate the bank to ensure it met the parameters established in its submissions. Then it will have no additional need for its money transmitter licenses. However, Paxos will also keep its BitLicense. Provided that Paxos has long relished an advantageous relationship with the NYDFS, there’s no requirement to throw away the regulatory support Paxos has previously developed over six years in New York.
Moreover, this will offer alternatives to clients. They can determine if they want to benefit from Paxos’ BitLicense framework or bank charter framework, particularly consumers of its brokerage service, recognized as Paxos Crypto Brokerage. One client viewing this unique choice is PayPal, which collaborated with Paxos to launch crypto features on its platform and subsidiary Venmo’s platform via a conditional BitLicense. Being a full BitLicense owner, Paxos manages the acquisition and custody of crypto for PayPal. It’s not clear if PayPal will choose to maintain the relationship via its conditional BitLicense or move the connection to the national trust when it’s completed and working.