Stablecoin issuers are competing for U.S. banking licenses.

In the current climate of increasing clarity in U.S. cryptocurrency regulation, stablecoin issuers are launching a new compliance race. Following Circle and Ripple, the stablecoin issuance platform Paxos has recently submitted an application to the Office of the Comptroller of the Currency (OCC) seeking to obtain a national trust bank charter. This indicates that mainstream stablecoin organizations are shifting from technical competition to a positive game of regulatory status, vying for the advantage of “becoming a bank.”

Since the beginning of this year, as the U.S. legislative body accelerates the advancement of the stablecoin regulatory framework, stablecoin issuers have begun to rethink their market positioning. USDC issued by Circle, RLUSD launched by Ripple, and PYUSD supported by Paxos all occupy important positions in the U.S. digital payment system. Obtaining a banking or trust license has become a key channel for them to integrate into the mainstream financial system, gain institutional trust, and directly access the payment clearing system.

Encryption giants compete

According to Decrypt, if Paxos's application for a national trust bank license is approved, it will allow them to be regulated at the federal level, no longer limited by New York state's limited trust company license. This will enable them to provide services for stablecoin issuance, encryption asset custody, and payment clearing nationwide. A spokesperson for Paxos stated in a statement that obtaining the license will help them “operate under the highest regulatory standards” and further enhance customer trust.

In fact, Paxos applied for a similar license in 2020 and received conditional approval from the OCC in 2021, but the approval expired in 2023 due to failure to complete the establishment procedures on time. During this period, the company had disputes with the New York Department of Financial Services (NYDFS) over compliance issues related to the issuance of BUSD in cooperation with Binance, ultimately reaching a settlement by paying approximately $48.5 million in fines in 2024.

At the same time, according to Reuters, Circle applied to establish a “national digital currency bank” as early as June 2025, hoping to use a banking license to custody USDC reserve assets and provide digital payment and clearing services for institutional clients. Ripple followed up in July, announcing plans to apply for a national banking license and seek Federal Reserve master account eligibility, intending to allow its stablecoin RLUSD to connect directly to the federal payment system. Ripple CEO Brad Garlinghouse stated in an interview: “We believe that stablecoins will play the same role in cross-border payments as bank accounts in the future, and the key is to establish directly regulated connection channels.”

The successive actions of the three companies indicate that the competition in the stablecoin sector is shifting from market share to regulatory hierarchy. CoinDesk quotes Alex Thorn, the strategy director at the New York blockchain consulting firm Galaxy Digital, saying: “This is not just a matter of encryption companies wanting to obtain licenses, but rather that regulatory authorities are preparing to treat stablecoins as bank-grade financial products for the first time.”

In the past few years, stablecoin issuers have mostly managed reserve funds and clearing operations through partnerships with traditional banks. This “shadow banking” model not only increases costs but is also constrained by the risks associated with partner banks. If they can obtain banking or trust licenses independently, it would allow them to directly custody reserve funds, simplify compliance processes, and enhance asset transparency and security. Circle pointed out in the application documents submitted to the OCC that a banking license would enable it to provide services for the circulation of digital assets at a financial institution level under a “unified regulatory framework.”

Regulatory window opened

From a regulatory perspective, the OCC issued an announcement in May 2025, reiterating that licensed trust banks may engage in digital asset custody, settlement, and related services. This provides compliance grounds for crypto companies and has become a direct policy trigger for the current wave of applications. Justin Slaughter, the Policy Director at the crypto policy research organization Paradigm, pointed out in an interview with CoinDesk: “The signal from the OCC is very clear—regulation is not about shutting down, but inviting these companies to come into the system.”

However, the path to approval remains long. The OCC has very high requirements for applicants in terms of capital adequacy, risk management, anti-money laundering, and transparency of reserve assets. Paxos has previously faced scrutiny due to its compliance history, and its second application may face stricter regulatory assessments. Meanwhile, Ripple's historical litigation disputes with the SEC also cast uncertainty on the outcome of its application. The Financial Times quoted Simon Taylor, an analyst at the London fintech consultancy 11:FS, as saying, “Circle is the most promising in this competition because it has a clear compliance record and a singular business focus, while Paxos and Ripple still bear the burden of old cases.”

Behind this round of “license competition” is the realistic pressure for the stablecoin industry to seek survival and legalization. According to CoinMarketCap data, the circulation scale of US stablecoins has exceeded 300 billion USD, with USDT and USDC accounting for more than 90% of the share. In the context of continued narrowing cryptocurrency volatility and tightening regulations, the legal status of issuers, asset custody safety, and transparency mechanisms have become key to market confidence. Licensed operations are seen as the only way to break free from the “regulatory gray area.”

The deeper motivation lies in the reshaping of the financial system. If stablecoin issuers can directly access the Federal Reserve's payment system as banks, not only will the clearing efficiency be comparable to that of traditional financial institutions, but it will also change the mode of US dollar circulation on the blockchain. Ripple CEO Garlinghouse has emphasized: “We are not just issuing stablecoins, but building a US dollar payment network that meets regulatory standards.”

The attitude of the U.S. regulatory authorities is also changing. In July 2025, the U.S. Congress passed the Stablecoin Transparency Act, which requires all U.S. dollar-pegged stablecoins to be issued by federally or state-licensed institutions and disclose 100% reserve asset composition. This provides a favorable policy for companies like Circle, Ripple, and Paxos that applied for licenses in advance. CoinDesk cited the views of Aaron Klein, a senior fellow at the Brookings Institution, stating, “The passage of the bill means that stablecoins officially enter the U.S. regulatory system, which will determine which companies can remain and which will be eliminated.”

From the market's expectations, whoever gets approved first will become the compliance benchmark for the industry and may attract institutional-level capital inflow. Galaxy Digital analyst Thorn pointed out: “In the future, stablecoin issuers will be more like banks, and banks will also be more like stablecoin companies.”