PayPal has applied for a Utah state-chartered industrial bank license as the issuer of the PYUSD stablecoin, a move hat would establish an institution to be called PayPal Bank. The filing aims to expand lending and deposit services while positioning PYUSD within a more integrated payments and custody framework, signaling a push to bring more financial functions in-house.
PayPal’s application targets expanded capabilities in lending, deposit-taking and settlement to better support U.S. small businesses. The firm already reports having provided more than $30 billion in loans and working capital to merchants and intends to offer business lending solutions and interest-bearing savings accounts through the planned bank. PayPal named Mara McNeill as president of PayPal Bank to lead the effort, noting her two decades of experience in banking and commercial lending.
An industrial bank is a state-chartered financial institution that can accept deposits and make loans under a distinct regulatory framework. By creating PayPal Bank, the company seeks to reduce dependency on third-party banking partners and centralize core functions such as deposit custody and credit origination.
Leadership frames the charter as a catalyst for growth and efficiency. Alex Chriss, PayPal’s president and CEO, encapsulated the commercial case: “Securing capital remains a significant hurdle for small businesses striving to grow and scale,” he said, adding that the charter would “strengthen our business and improve our efficiency.”
Implications for PYUSD and crypto services
While the announcement did not explicitly link the charter to PYUSD, analysts see strategic alignment that could enhance the stablecoin’s utility. The charter would allow PayPal to originate loans, hold deposits tied to stablecoin activity and seek deposit insurance, which could lower operational friction and support broader use cases for PYUSD.
Regulatory headwinds have eased: the U.S. Securities and Exchange Commission closed its probe into PYUSD earlier in 2025 without enforcement action, removing a material regulatory overhang. PayPal has concurrently expanded crypto features such as wallet-to-wallet transfers and merchant “Pay with Crypto” integrations, indicating a broader push to blend tokenized payments with traditional rails.
Market observers anticipate growth alongside cautions around custody and openness. Jonathan Inglis, CEO of Protocol Theory, said the combination could “turbocharge” PYUSD’s market penetration while cautioning about trade-offs for custody and open networks.
Utah’s industrial bank regime offers commercial-bank-like oversight with fewer federal holding company constraints. PayPal chose the state in part because industrial banks there operate under a regulatory framework that preserves state-level supervision while benefiting from an exemption from the Bank Holding Company Act, providing operational flexibility.
The strategy aligns with fintechs seeking direct control over regulated infrastructure and deeper integration of digital assets with payments. If approved, PayPal would gain direct access to credit-card networks and the ability to apply for Federal Deposit Insurance Corporation coverage for deposits, potentially reshaping competitive dynamics among traditional banks, fintechs and crypto-native firms.
PayPal’s charter application represents a deliberate step to internalize core financial infrastructure, expand lending and deposit products, and align PYUSD with regulated banking capabilities.
