Cryptocurrency firm Paxos has received a conditional license from the Office of the Comptroller of the United States of America (OCC) to create a separate, federally regulated trust.
Paxos chief attorney Daniel Burstein said the approval of the OSS will allow Paxos to create a new trust company that will be controlled at the federal level. It will operate separately from the current Paxos Trust, operating in New York under the BitLicense previously issued by the New York State Department of Financial Services (NYDFS). Both trusts will be managed by the Paxos team.
This is not the first cryptocurrency firm to receive regulatory approval for banking in the country. Earlier this year, the OCC issued such a license to cryptocurrency firms Anchorage and Protego. To this end, the management of these firms sought to transform their structure. However, unlike them, Paxos received conditional consent from the regulator to create a separate trust.
It can take about 18 months for Paxos to comply with the established regulatory requirements. Then the regulators will conduct the necessary checks to ensure that the new trust meets the declared parameters. The regulator will then issue a permanent license to Paxos, which will allow the company to operate in all states. Burstein said the OCC approval gives Paxos “clear national authority,” meaning the ability to store and exchange conventional money and cryptocurrencies at the state level.
According to Burstein, Paxos could get a regular license to transfer money within the country, but that would prevent it from holding assets. Paxos intends to become a trusted digital asset services provider and has therefore focused on obtaining a federal banking license despite stricter capital and audit requirements.
“There are many other paths we could take. But they do not provide the level of reliability that we need, ”said Burshtein.
After the launch of the new trust, Paxos will continue to operate in accordance with the BitLicense. Burshtein explained that the firm does not need to ditch the infrastructure in New York, which took about six years to build. In addition, Paxos customers will have the option of choosing a trust according to their needs.
As a reminder, last year Paxos partnered with payment company PayPal to launch cryptocurrency trading.
