PayPal Holdings has applied to the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions to establish a Utah-chartered industrial bank.
The payments company, which already issues the USD-denominated stablecoin PYUSD with a market capitalization of USD 3.87 billion, aims to expand its lending business for small and medium-sized enterprises and reduce its reliance on third-party providers. The planned PayPal Bank would offer FDIC-insured deposits and could advance the regulatory integration of digital assets into traditional banking services.
The move comes amid a changing regulatory environment: Since President Donald Trump took office in January 2025, more than 18 fintech companies have submitted bank license applications – significantly more than during the Biden administration. Crypto companies such as Circle Internet Group, Ripple Labs, BitGo, Paxos, and Fidelity Digital Assets have also recently received conditional preliminary approvals from the Office of the Comptroller of the Currency (OCC) for federally chartered national trust banks.
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Industrial bank charter: a regulated alternative to traditional banking
PayPal has opted for a so-called Industrial Loan Company (ILC) in Utah – a banking structure subject to the same regulatory requirements as commercial banks, but not required to comply with the Bank Holding Company Act. This structure allows non-bank companies to offer banking services without subjecting their entire business model to bank holding company regulation.
With Mara McNeill, PayPal has appointed an experienced banking executive as president of the planned PayPal Bank. McNeill brings more than 25 years of experience in the financial services sector and previously served as president and CEO of Toyota Financial Savings Bank. Her appointment signals that PayPal intends to build its banking operations professionally. The choice of Utah as a location is strategic: The state has established itself as a preferred hub for industrial banks due to its clear regulatory framework combined with moderate requirements. Other fintech companies such as Square (now Block) have already taken this route to expand their financial services.
USD 30 billion in lending volume as a starting point
PayPal is not new to small business lending. In March 2025, the company reported that since 2013 it has extended more than USD 30 billion in loans and working capital financing – across more than 1.4 million loans to over 420'000 business accounts worldwide.
The company’s two main products are PayPal Working Capital, launched in 2013 and repaid as a percentage of PayPal revenues, and PayPal Business Loans, introduced in 2017, which offer traditional term loans with fixed repayments. PayPal Business Loans achieves a Net Promoter Score of 76, while PayPal Working Capital scores 85 – both outstanding figures in the financial industry. More than 90 percent of customers take out loans repeatedly.
PayPal currently works with partner banks to originate these loans. Obtaining its own banking license would allow the company to internalize this process, reduce costs, and respond more quickly to market needs. In addition, FDIC-insured interest-bearing savings accounts could be offered – a product likely to be attractive to business customers in the current interest rate environment.
PYUSD: stablecoin integration into regulated banking
The banking license could be of particular strategic importance for PayPal’s stablecoin PYUSD. Launched in August 2023 in partnership with Paxos Trust Company, the dollar-pegged stablecoin has recorded remarkable growth in 2025: Its market capitalization rose from around USD 500 to 600 million at the beginning of the year to the current USD 3.87 billion – an increase of 660 percent. This places PYUSD at number 26 in the CoinMarketCap ranking and makes it the sixth-largest stablecoin on the market.
Around 70 percent of the PYUSD supply, approximately USD 2.7 billion, resides on Ethereum. Multi-chain expansion and partnerships have driven adoption in DeFi applications. In July 2025, PayPal also announced its “Pay with Crypto” service, enabling merchants to accept payments in more than 100 cryptocurrencies, with immediate conversion into stablecoins or fiat currency. During the introductory phase until July 2026, the transaction fee is just 0.99 percent, rising to 1.5 percent thereafter – still well below typical international credit card fees of 1.75 to 3 percent.
A proprietary banking license could integrate PYUSD transactions directly into regulated settlement structures, potentially accelerating institutional adoption. However, it remains to be seen how the FDIC will assess the integration of stablecoin operations into a traditional banking framework.
Regulatory headwinds despite a more liberal fintech policy
Despite the favorable regulatory climate under the Trump administration, bank license approval processes remain lengthy and complex. The FDIC will scrutinize PayPal’s capital adequacy, risk management systems, and the integration of crypto-related activities. Previous attempts by fintech companies to obtain banking licenses have sometimes taken years or ended in rejection.
Analysts at Bank of America and JPMorgan downgraded PayPal’s stock to “Neutral” in the fourth quarter of 2025, citing slower growth and margin pressure. Investing in a banking license ties up resources and requires substantial compliance spending – a risk that may only pay off over the long term.
Nevertheless, PayPal is following a clear industry trend: The convergence of fintech, traditional banking, and crypto infrastructure is accelerating. With a banking license, PayPal could not only reduce costs but also develop new products that combine traditional banking services with digital assets. The coming months will show whether regulators are prepared to approve this vision.
