The three major crypto giants are aiming for the National Trust license. Is the next grayscale on the way?

According to Coindesk, according to a public document released on Wednesday (document dated December 8th), stablecoin issuer Paxos is applying for a license from the National Trust Bank. So far, three encrypted financial companies have applied for the license. The other two are BitPay, an encrypted payment service provider, and Anchage, a custodial service provider.

So, what can the Paxos license plate be used for, and how will it “empower” the current business? If approved, can it become the next grayscale?

The gold content and difficulty of applying for a national trust license

Trust may be unfamiliar to some people, but when it comes to grayscale, everyone in the circle should understand it.

Grayscale Fund was founded by Digital Currency Group (DCG) in 2013 and is a trust fund regulated by the SEC.

For the national trust that Paxos applied for, the regulatory agency is the U.S. Office of the Comptroller of the Currency (OCC) under the U.S. Department of the Treasury. OCC also includes national banks and the Federal Reserve Association. It is one of the major financial regulatory agencies in the United States.

Although the regulators are different, as a trust fund, if passed, Paxos will be able to conduct business across the country instead of applying for a state-by-state application. Compared with the local-related licenses that most crypto companies apply for, it can be said to be “completed in one stroke.” “.

The content of trust business includes, instead of entrusting units or individuals, operating, managing or handling monetary funds or other properties. Of course, the specific mode of business development depends on whether the license can be applied for.

Dan Burstein, Paxos’ general counsel, expressed confidence in financial law and OCC in a blog post.

“The National Charter proposes to make it easier for banks to do business across states. This flexibility will allow startups like Paxos to focus resources on building great products. The National Trust Bank Charter will provide us with the flexibility to operate across the United States. , While continuing to comply with the highest regulatory standards.”

According to the Asia-Pacific Institute of Future Finance, as soon as the company submits an application, the OCC begins to review it. There are many key elements of the review, including the proposed bank’s business model, risk profile, staff composition, whether there is a clear profit method and timing, whether there is sufficient capital and liquidity to support the expected transaction volume, and have matching skills , Organizers and management with relevant experience.

In view of this, the review may not yield results soon. If it can be passed, what kind of combination will the National Trust and Paxos have? We might as well take a look at Paxos businesses that are not well understood by everyone.

Not only is it issuing billions of dollars of anchor coins, Paxos also has these to B businesses

When it comes to Paxos, everyone’s first reaction is the issuer of the compliant stablecoin PAX.

In September 2018, the New York State Financial Services Administration (NYDFS) approved two stablecoins with 100% U.S. dollar reserve protection: PAX and GUSD. After two years of development, the two major stablecoins have submitted different answers.

According to QKL123 statistics, the current market value (issuance volume) of PAX is US$398 million, and the 24H trading volume is US$56 million. The market share is 1.63% of the legal currency mortgage stable currency, second only to USDT and USDC. , GUSD’s market share is much smaller.

In addition to providing US dollar stablecoins for the C side, Paxos’s business for the B side is also quite large.

According to the information disclosed on the paxos official website, Paxos’ business is mainly divided into three categories.

One is to provide brokers, stable currency issuance and acceptance tools for corporate clients. The brokerage business is to build encrypted products for customers (such as providing custody and trading services for Revolut US); a typical example of helping companies issue compliant stablecoins is the stablecoin BUSD jointly issued with Binance, so that companies can have their own Stable currency, but the compliance operations behind it are provided by Paxos. As the issuer of PAX, BUSD and PAXG (gold anchor currency), Paxos has tokenized billions of dollars worth of cash and gold, and Paxos is also The custodian of HUSD; in addition, Paxos also provides various companies with an interface for issuing coins to exchange stable coins and mainstream coins.

Second, it is the fiat-crypto currency exchange itBit that provides compliant (supervised by the New York Financial Services Administration DFS) and rebates on pending orders for institutions and large accounts;

Third, Paxos faces traditional brokers and provides them with an encrypted digital system based on private chains for clearing and settlement.

It can be seen that the issuance of stable coins is only its earliest and most obvious business, and more potential businesses are shifting to B-side services.

Although he does not have the background of several years of exchanges like Coinbase and Kraken, compliance is undoubtedly a good card for Paxos. If the National Trust Bank license applied for this time is passed, it will undoubtedly pave the way for this crypto financial empire. the way.

If approved, it will be a big step in the history of crypto finance

In addition to the familiar Paxos, two other encryption companies, BitPay and Anchage, are also leaders in their respective fields.

BitPay was founded in 2011 and has become the world’s largest blockchain payment provider. With its efforts, companies such as Amazon and Microsoft have access to digital currency payment interfaces. Interested friends can click here bitpay.com for support The merchant of the channel. On November 18 this year, Deloitte also included BitPay on the list of top 500 technology companies in North America in its report.

Founded in 2017, Annchage has completed two rounds of financing of US$57 million within three years of its establishment. By mid-2019 (that is, one and a half years ago), it was valued at US$180 million. Investors include payment giant Visa and top venture capitalist A16z. , Polychain Capital, Paradigm, Andreessen Horowitz, etc.

The three companies that applied for the national trust license at this time can be said to be quite lucky, because the acting director of the current OCC has a deep relationship with encrypted finance and has a positive attitude.

“In 2020, the most important event that has an impact on the U.S. encrypted digital financial market is the appointment of Coinbase’s Chief Legal Officer Brian Brooks as the Acting Administrator of the Office of the Comptroller of Currency, which oversees the U.S. Federal Banking Industry. Under his leadership, the U.S. Currency Supervisor The Department issued a public letter of explanation to explain its position in the supervision of encrypted digital financial supervision, and eliminated the concerns of banking institutions in providing encrypted digital currency financial-related services in compliance. Therefore, traditional banking institutions began to provide encrypted digital currency related services “Gu Yanxi, an encryption scholar, pointed out in a review article.

Perhaps, seeing this dawn, Paxos, BitPay and Anchage dare to move forward boldly.

Prior to this, although there were precedents for encrypted financial technology companies to obtain bank licenses, they were only issued by the state government and their business scope was limited.

Previously, the cryptocurrency exchanges Kraken and Avanti successively obtained state charters from the Wyoming Department of Banking and became the first crypto banks in the United States. Of course, the two companies did not follow the “federal route.” After Paxos started this first, perhaps more crypto bank applications are already on the way.

The main application areas of encrypted finance are banking and securities. Therefore, if you can obtain the corresponding financial license, you can promote faster and longer-term business development.

It is hoped that one year later, there will be more than one grayscale trust in the cryptocurrency circle.