Paxos Trust Company has renewed its efforts to secure a national trust bank charter in the U.S., joining a growing list of digital asset firms seeking federal oversight as new stablecoin regulations take shape. The company, known for issuing PayPal's PYUSD stablecoin, has applied to the Office of the Comptroller of the Currency (OCC) for the charter, aiming to replace its current New York Department of Financial Services (NYDFS) license with a federal one.

This move comes as the U.S. is implementing new rules for stablecoins, highlighted by the recent passage of stablecoin legislation signed in July. The pursuit of a national trust bank charter signifies a strategic shift among stablecoin issuers toward uniform regulation and broader market reach. Circle, the issuer of USD Coin (USDC), and Ripple, issuer of RLUSD, have also filed similar applications with the OCC.

Paxos's application for a national trust bank charter is not its first attempt. The company initially applied in 2020 and received preliminary conditional approval from the OCC in 2021. However, the application stalled and eventually expired in 2023. If the OCC approves the current application, Paxos would transition from its existing limited-purpose trust charter granted by the NYDFS to a federal charter overseen by the OCC. CEO of Paxos, Charles Cascarilla, stated that the change would strengthen “safety and transparency” in its operations.

A source familiar with Paxos's plans told Reuters that obtaining a national trust bank charter would not alter the company's business model. Instead, it would provide the "highest level of regulatory oversight," which carries significant weight both in the U.S. and internationally. This federal oversight would allow Paxos to hold and manage customer assets under federal supervision and process payments more efficiently. It is important to note that this type of license would not allow Paxos to accept traditional cash deposits or issue loans, distinguishing it from conventional banks.

The application comes shortly after Paxos agreed to a $48.5 million settlement with New York regulators over claims that it failed to sufficiently monitor for illegal activities linked to Binance. Paxos had partnered with Binance to issue Binance USD (BUSD) until the NYDFS ordered the token's suspension in early 2023. The settlement followed a broader enforcement action in which Binance's former chief executive admitted to violating U.S. anti-money laundering laws, resulting in a $4.3 billion settlement in 2023.

If Paxos's application is approved, it would join Anchorage Digital as one of the few digital asset firms with a federal trust bank charter. The OCC's decision will be a significant indicator of the evolving regulatory landscape for stablecoins and digital asset companies in the U.S..