The three major encryption giants aim at the US National Trust license, is the next Grayscale on the way?

Stablecoin issuer Paxos is applying for a license from the U.S. National Trust Bank, according to a public document published on Wednesday (dated Dec. 8), Coindesk reported. So far, three encrypted financial companies have applied for the license. The other two are encrypted payment service provider BitPay and custody service provider Annchage.

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The gold content and difficulty of applying for a National Trust license

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

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

The national trust that Paxos applied for this time is supervised by the Office of the Comptroller of the Currency (OCC) under the U.S. Department of the Treasury. OCC also supervises national banks and Federal Savings Associations, and is one of the major financial regulatory agencies in the United States.

Although the regulators are different, theThe content of trust business includes operating, managing or handling monetary funds or other properties on behalf of entrusted units or individuals. Of course, the specific mode of business development depends on whether the license can be applied for.

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

in a blog postin a blog postExpressed confidence in Finance Law and OCC.

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according toAsia Pacific Future Finance InstituteAs soon as the company files an application, the OCC will start reviewing it. There are many key elements of the review, including the proposed bank's business model, risk profile, personnel composition, whether there is a clear profit method and timing, whether there is sufficient capital and its liquidity to support the expected transaction volume, and has matching skills , organizers, management, etc. with relevant experience.

OCC review needs to go through four stages, pictured from Asia Pacific Future Finance Institute

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

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

In September 2018, the New York State Department of Financial Services (NYDFS) approved two stablecoins with 100% USD reserve guarantees: PAX and GUSD. After two years of development, the two major stablecoins have given different answers.

According to the statistics of QKL123, the current market value (circulation) of PAX is 398 million US dollars, and the 24H trading volume is 56 million US dollars. The market share accounts for 1.63% of the fiat-backed stablecoins, second only to USDT and USDC. , the market share of GUSD is much smaller.

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according topaxos official websiteAccording to the disclosed information, Paxos' business is mainly divided into three categories.

First, provide brokers, issue stablecoins and acceptance tools for corporate customers. The brokerage business is to build encryption products for customers (such as providing custody and trading services for Revolut US); a typical example of helping companies issue compliant stable coins is the stable coin BUSD jointly issued with Binance, so that companies have their own Stable currency, but the compliance operation behind it is 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. Paxos is also The custodian of HUSD; in addition, Paxos also provides an interface for various companies to issue coins to exchange for stable coins and mainstream coins.

2. ItBit, a legal currency-cryptocurrency exchange that provides compliance (regulated by the New York Financial Services Authority DFS) and pending order rebates for institutions and large investors;

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

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

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If approved, it would be a huge step in the history of crypto finance

In addition to Paxos, which is more familiar to everyone, the other two encryption companies, BitPay and Annchage, are also leaders in their respective fields.

Founded in 2011, BitPay has become the world's largest blockchain payment provider. Thanks to its efforts, Amazon, Microsoft and other companies have connected to the digital currency payment interface. Interested friends can click herebitpay.comLearn about merchants that support this channel. On November 18 this year, Deloitte also included BitPay in the list of the top 500 technology companies in North America in its report.

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

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

"In 2020, the most important event affecting the U.S. encrypted digital financial market is the appointment of Coinbase Chief Legal Officer Brian Brooks as acting director of the Office of the Comptroller of the Currency, which oversees the U.S. federal banking industry. Under his leadership, the U.S. Comptroller of the Currency The Administration issued a public explanation letter explaining its position on the supervision of encrypted digital currency, eliminating the compliance concerns of banking institutions in providing financial services related to encrypted digital currency. Therefore, traditional banking institutions began to provide services related to encrypted digital currency .”Cryptographer Gu Yanxi in a review articlepointed out.

Perhaps, seeing this dawn, Paxos, BitPay and Annchage dared to move forward boldly.

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

Prior to this, cryptocurrency exchanges Kraken and Avanti successively obtained state charters from the Wyoming Department of Banking and became the first encrypted banks in the United States. Of course, the two companies did not take the "federal route." After Paxos pioneered this, perhaps more encrypted banking applications are already on the way.

The main application areas of encrypted finance are banking and securities. Therefore, if the corresponding financial license can be obtained, it can promote faster and long-term business development.

I hope that one year later, there will be more than one grayscale trust in the cryptocurrency circle.