PayPal Applies for State-Chartered Bank License for PYUSD Stablecoin

Payments leader PayPal has filed an application for a state-chartered bank license in Utah. This move is part of a broader trend among fintech and cryptocurrency companies seeking bank charters to enhance their service offerings. With this license, PayPal plans to establish an industrial loan division to aid small businesses in the U.S. and expand its cryptocurrency operations, particularly through its PYUSD stablecoin.

Key Takeaways

PayPal has applied for a Utah state-chartered industrial bank license.
The new entity would be called PayPal Bank, focusing on lending solutions for small businesses.
A bank charter would allow PayPal to issue loans, manage deposits, and directly connect to payment networks.
This move reflects an increasing trend among crypto firms seeking banking licenses amid changing regulatory landscapes.
PayPal launched its PYUSD stablecoin in August 2023, enhancing its cryptocurrency capabilities.

PayPal Bank

PayPal Applies for a State Bank License

Payments giant PayPal has officially submitted an application for a Utah state-chartered industrial bank license as of Monday. This application aligns with the trend of fintech and cryptocurrency companies pursuing bank charters to broaden their service offerings.

The digital payments platform intends to establish an industrial loan arm, named PayPal Bank, dedicated to providing lending solutions to small businesses across the United States.

Furthermore, obtaining this state-chartered license would grant the PYUSD stablecoin issuer the ability to originate loans, hold deposits, and directly access payment networks.

PayPal's CEO, Alex Chriss, underscored that small businesses often face considerable challenges in obtaining capital to fuel their growth. “Creating PayPal Bank will fortify our business and enhance our efficiency, allowing us to better support small business growth and economic opportunities throughout the U.S.,” Chriss stated in the announcement.

The application has been filed with both Utah regulators and the Federal Deposit Insurance Corporation (FDIC).

Crypto Firms Increasingly Seek Banking Charters

The recent push by PayPal for a bank license reflects a rising trend among cryptocurrency firms looking to obtain banking charters. Jonathan Gould, head of the U.S. Office of the Comptroller of the Currency (OCC), recently noted that there had been approximately 14 charter applications submitted since January, including from digital asset companies.

In addition, PayPal has emphasized the importance of regulated integration of digital assets in recent years. This includes enabling merchants to accept Bitcoin and Ethereum at checkout.

Currently, the OCC has received trust charter applications from five different cryptocurrency firms, such as stablecoin issuer Circle, Coinbase, and Ripple. For example, Ripple is aiming to bring its dollar-backed stablecoin, RLUSD, under federal regulations by applying for a national banking license.

On Monday, PayPal announced that Mara McNeill will be appointed president of PayPal Bank, who brings over twenty years of experience in banking and commercial lending.

PayPal Enhances Reach of PYUSD Stablecoin

PayPal introduced its dollar-pegged stablecoin, PYUSD, in August 2023, in collaboration with Paxos Trust Company, a regulated entity in the U.S. Earlier this year, the U.S. Securities and Exchange Commission dropped its high-profile investigation into the stablecoin, resulting in no further action during a wider crackdown on cryptocurrency-related enforcement.

Last week, PayPal confirmed that U.S.-based YouTube creators can now opt to receive their payouts in PYUSD, further integrating the stablecoin into routine payment transactions.