Paxos is the latest crypto firm to apply for a national banking license, joining fellow stablecoin issuers Ripple and Circle. This follows the firm’s settlement with New York’s Department of Financial Services (NYDFS) over its anti-money laundering failures.
Paxos Applies For National Trust Charter
In a press release, the crypto firm announced that it has applied to convert its NYDFS trust charter into a national trust charter with the Office of the Comptroller of the Currency (OCC). The firm noted that this strategic move will place it under federal oversight.
Furthermore, Paxos stated that it underscores their commitment to maintain the highest regulatory standards of any blockchain infrastructure and tokenization platform. Meanwhile, the firm joins Ripple and Circle, which already applied for their respective licenses over a month ago.
As CoinGape reported, Ripple’s application recently went public as part of the approval process. However, these crypto firms have so far faced resistance from banking associations like the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA).
Meanwhile, Paxos declared that an OCC national trust charter will reinforce its commitment to maintaining the highest global standards for safety and transparency. The firm already has existing regulatory oversight in Europe, Singapore, and the Abu Dhabi market.
Paxos also confirmed that its issued assets will remain backed by bankruptcy-remote reserves in U.S. dollars, Treasuries, and cash equivalents, ensuring 1:1 redemption. They assured that customers can expect uninterrupted service and seamless transition even as they transition to gaining federal oversight.
Firm Settles With NYDFS
Paxos’ application follows its settlement with the NYDFS. A Reuters report revealed that the firm reached a $48.5 million settlement to resolve charges over its failure to monitor illegal activity related to the crypto exchange Binance.
The crypto firm will pay a $26.5 million civil fine and spend $22 million to upgrade its compliance program. Notably, Paxos was the issuer of the BUSD stablecoin, which it had created with the top crypto exchange.
Paxos eventually had to stop issuing the stablecoin in February following a directive from the New York regulator. The crypto firm also confirmed that it had settled the case, stating that it was pleased to do so. They also claimed that they had “fully remediated” the compliance issues and that customer accounts were not impacted.
Boluwatife Adeyemi
Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across several niches. His speed and alacrity in covering breaking updates are second to none. He has a knack for simplifying the most technical concepts and making them easy for crypto newbies to understand.
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