Cryptocurrency and digital asset services companies BitPay and Paxos have filed applications with the OCC to create and become federal banks to expand their services within the United States.
The two companies of cryptocurrencies, and digital assets, BitPay y Paxos, are seeking approval from the OCC, the Office of the Comptroller of the Currency in the United States, to create and become new banking entities, respectively, and expand their cryptocurrency services in the country.
BitPay is a cryptocurrency payment processor such as Bitcoin (BTC), while Paxos is the issuer of the stablecoin, or stablecoin PAX, which maintains parity with the US dollar and is called by the company as “the new digital dollar.” Although both companies have a strong position within the cryptocurrency industry, they filed their applications with the OCC to seek the regulator’s approval to establish new regulated national banks for fiduciary and cryptocurrency services in the United States.
Similar to the initiatives of national banks that already exist in the country, such as Kraken Financial, the first approved crypto bank in the country, or Avanti Financial, the second bank initiative in this space, BitPay and Paxos are looking to extend their domains and offer new fiat and crypto banking services, such as crypto asset deposits and custody, investment products and instruments, and much more.
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Georgia and New York as main headquarters
At your request, BitPay express that its intention is to organize and operate a national trust bank, to operate in accordance with the provisions of the amended National Bank Act of the United States. Furthermore, the proposed entity, if approved, will bear the name of BitPay National Trust Bank and will be headquartered in Alpharetta, Georgia.
The application also indicates that this bank will be incorporated with a capital of 12 million dollars, and that it will issue approximately 120 million shares at a value of 1 $ USD per share initially. Eden Doniger, General Counsel and Chief Compliance Officer of BitPay, confirmed the application to the OCC, as well as an OCC member confirmed that the regulator received the application from the digital asset payments company.
“We confirm that BitPay has submitted an application to the U.S. Office of the Comptroller of the Currency (OCC) to establish the BitPay National Trust Bank.”
Separately, Paxos' application to the OCC seeks approval from the regulator for obtain a national Trust Bank charter and become a federal bank, according to the report release issued by the company itself. Paxos is headquartered in New York, the most populous city in the United States and also the country's financial center, home of Wall Street.
More efficient and reliable financial services
The goals pursued by both BitPay and Paxos in seeking OCC approval to charter national banks in the U.S. respond to the need to offer more efficient financial services to customers, both companies say. In its statement, Paxos says that receiving a national Trust Bank charter will allow the company to expand its services in an objective manner, and “serving customers across the country in the most efficient way”.
To the expectations of the new administration
However, we are only talking about applications that have not yet been approved by the regulator. The United States is in a process of transition of its government, and Brian brooks, the country's current Comptroller of the Currency, was nominated by Donald Trump to serve another term on the OCC, though it is not known whether Joe Biden will also nominate Brooks to serve in the role.
Brian Brooks is well-known in the crypto space, not only for having been legal advisor to Coinbase, one of the exchanges Brooks is not only one of the largest and most widely used cryptocurrencies in the world, but also for his dedication to regulating the cryptocurrency industry in the appropriate manner. Brooks has maintained a fairly favorable position regarding the crypto industry, which is why he has been the subject of strong criticism from some legislators, who accuse him of favoring and preferring, unbalancedly, this industry. Likewise, during a interview In Forbes, Brooks stated that the North American nation could see the birth of new cryptocurrency banks in the near future.
A long road ahead
In the case of BitPay, Doniger acknowledged that there is still a long way to go to achieve its goal, and that this is just the first step of many to launch a national banking institution authorized in the country. For its part, Paxos has the approval of the New York State Department of Financial Services (NYDFS) to operate as a trust services company in the country, which represents a great benefit for the company in its goal of achieving national Trust Bank status.
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