Crypto firm Paxos receives OCC approval to form national trust bank

WASHINGTON — The cryptocurrency firm Paxos National Trust has received preliminary conditional approval by the Office of the Comptroller of the Currency for a national trust charter, the agency announced Friday.

The company had filed its application with the OCC to become a national trust in December. Dan Burstein, general counsel and chief compliance officer at Paxos, wrote in a blog post at the time that company would maintain its New York State Department of Financial Services trust charter but that a national charter would give it the flexibility to operate across state lines.

Unlike many banks, national trusts are not required to have federal deposit insurance, although an institution can seek to accept deposits.

“We see significant benefits in having both a nationally and state regulated bank,” Burstein said in a new blog post on Friday. “With separate oversight and jurisdiction on both levels, Paxos implicitly demonstrates how our operations meet higher standards than others in our field.”

The company runs the itBit cryptocurrency exchange, and its Crypto Brokerage is behind PayPal’s service that lets U.S. users buy, hold and sell cryptocurrency directly from their PayPal digital wallet.

In its approval letter, the OCC wrote that Paxos will be an uninsured national bank and its operations will be limited to those of a trust company. Those include custody for digital assets and other cryptocurrency services related to payment, exchange and trading. In the letter, the OCC noted that it received one comment letter signed by a number of trade groups representing banks that objected to the proposed charter and requested more information about Paxos's business model and operations.

Paxos is one of several cryptocurrency companies to seek national oversight by the OCC in recent months. BitPay filed its application the same week as Paxos. In January, the OCC granted a national trust charter to the digital asset platform Anchorage.

In addition, the online lender Figure Technologies has sought its own nontraditional bank charter from the OCC, but its charter bid has drawn opposition from the banking industry.