Stablecoins are digital tokens backed by real assets like U.S. dollars. They help connect regular money with blockchain technology, giving the steady value of traditional currency along with the fast transfer speed of crypto. Paxos Trust Company is a leading name in this space, known for creating PayPal USD (PYUSD) and the new Global Dollar (USDG). Now, Paxos wants to become a federally regulated trust bank, supervised by the U.S. Office of the Comptroller of the Currency (OCC).
On August 11, 2025, Paxos applied to change its New York trust license to a national one. If approved, the OCC would oversee Paxos instead of New York regulators. This change would let Paxos hold digital assets, issue stablecoins, and process payments with national protection, just like traditional banks. It would also lower costs by reducing the need to follow different rules in every state, making it easier for Paxos to grow across the country and internationally.
Stablecoins have become the lifeblood of decentralized finance (DeFi). They account for about 70% of transactions in this sector, providing liquidity for lending, trading, and cross-border payments. Paxos’s stablecoins are already widely used, with PYUSD circulating over $500 million and USDG expanding into European markets in mid-2025. Together, Paxos’s tokens have processed $310.7 billion in transactions since launch, according to Token Terminal data.
By obtaining a federal charter, Paxos would not only strengthen its credibility but also set a standard for how regulated stablecoins can function in the U.S. financial system. It could potentially act as the “bank of stablecoins,” serving institutions and consumers alike.
Paxos: A Company with History
Paxos has built its reputation carefully over the past decade.
| Milestone | Date | Impact |
|---|---|---|
| NYDFS Charter Granted | 2015 | Enables regulated crypto custody. |
| PAX Stablecoin Launch | 2018 | First regulated USD-pegged token; $160B tokenized since. |
| BUSD Partnership with Binance | 2019 | Peaks at $18B supply before 2023 halt. |
| PYUSD Debut with PayPal | 2023 | $500M+ circulation; Solana integration. |
| USDG EU Rollout | July 2025 | MiCA-compliant; $150M initial volume. |
| OCC Application Filed | Aug. 11, 2025 | Seeks federal trust status. |
The OCC’s approval would open doors for Paxos and its partners. Stablecoin holders could gain access to protections similar to those enjoyed by customers of national banks, including insurance on fiat deposits. Institutions holding large amounts of cash on the sidelines might then feel comfortable deploying billions into blockchain-based products, boosting adoption.
Challenges and Concerns
Despite the advantages, the path is not guaranteed. Paxos recently faced a $26.5 million fine from NYDFS over its former partnership with Binance, raising questions about its compliance procedures. Regulators may also worry that a federally chartered stablecoin issuer could pose systemic risks if market confidence falters, similar to the collapse of TerraUSD in 2022. The OCC has previously shown caution in granting charters to crypto firms. In 2021, some applications received only conditional approvals after criticism from community banks. Current regulatory priorities, including the GENIUS Act, focus heavily on anti-money laundering controls and consumer protection, making risk management a central test for Paxos.
Paxos is not alone in seeking federal recognition. Rivals such as Circle, issuer of USDC, and Ripple, which is behind RLUSD, have also applied for OCC charters. This wave of applications reflects a desire to standardize stablecoin rules under a single national framework rather than navigating a patchwork of state regulations. At the same time, stablecoin adoption is accelerating worldwide. Remittance corridors in Asia and other regions, where money transfers total more than $300 billion annually, present a significant growth opportunity. Paxos has already integrated USDG with exchanges like Kraken and Gate.io to tap into these markets.
Looking Ahead
If Paxos secures the charter, it would represent a major shift in how stablecoins are treated in the U.S. financial system. Instead of being seen as risky crypto products, they could start to resemble federally recognized payment tools. This would strengthen links between blockchain and traditional finance while potentially boosting trust among regulators, institutions, and everyday users.
Still, concentration risks remain. Today, the majority of stablecoin activity is controlled by just two issuers USDT and USDC. Adding Paxos as a federally chartered player would provide more diversity, but it could also mean even greater reliance on a few centralized entities.
Paxos’s application to the OCC is more than an administrative step. It signals the company’s ambition to anchor the future of stablecoins within the established U.S. banking system. If approved, Paxos could set a model for others, bridging the gap between crypto and traditional finance while expanding the reach of digital dollars around the world. The decision now rests with regulators. Approval would not just impact Paxos but could shape the entire $230 billion stablecoin market for years to come.
Stay informed with daily updates from Blockchain Magazine on Google News. Click here to follow us and mark as favorite: [Blockchain Magazine on Google News].
Disclaimer: Any post shared by a third-party agency are sponsored and Blockchain Magazine has no views on any such posts. The views and opinions expressed in this post are those of the clients and do not necessarily reflect the official policy or position of Blockchain Magazine. The information provided in this post is for informational purposes only and should not be considered as financial, investment, or professional advice. Blockchain Magazine does not endorse or promote any specific products, services, or companies mentioned in this posts. Readers are encouraged to conduct their own research and consult with a qualified professional before making any financial decisions.
About the Author: John Brok
