PayPal Moves to Set Up Utah-Chartered Bank to Bolster Payments and Lending

PayPal has applied to establish a Utah-chartered industrial bank as it seeks tighter control over lending, deposits, and payments infrastructure for small businesses in the U.S.

If approved, it could help position the payments giant to more directly support its expanding crypto and stablecoin operations within a regulated banking framework.

The application, filed with Utah regulators and the Federal Deposit Insurance Corporation, would allow PayPal to originate loans, hold customer deposits, and access payment networks more directly, reducing its reliance on partner banks.

The aim is to "provide business lending solutions more efficiently to small businesses in the U.S., while reducing reliance on third parties," PayPal wrote in a statement.

"Securing capital remains a significant hurdle for small businesses striving to grow and scale,” CEO Alex Chriss said in the statement.

Decrypt has reached out to the FDIC, the Utah Department of Financial Institutions, and PayPal for additional information on the filing, but has not yet received a response.

PayPal’s foray into crypto has centered on bringing digital assets into regulated payment flows, starting with consumer crypto buying and selling, followed by merchant acceptance, checkout conversion, and the launch and expansion of its PYUSD stablecoin for payouts and settlement within its existing payments network.

PayPal’s efforts “reflect a broader trend of fintechs seeking more direct control over regulated financial infrastructure to deliver simpler, more connected financial experiences,” Jonathan Inglis, CEO of crypto-focused consumer research firm Protocol Theory, told Decrypt.

“Nearly half of adults globally say it should be easier to move and manage funds between digital assets and traditional financial services, which increases pressure on platforms to integrate more tightly,” Inglis noted.

While better infrastructure could “accelerate integration,” it could also risk “framing crypto primarily through custodial and permissioned models rather than open, user-owned systems,” Inglis said.

Among consumers, 43% are more inclined to engage with digital assets “if access were easier,” Inglis noted, citing their data. “The long-term challenge is ensuring this convenience does not come at the expense of self-custody and open networks,” Inglis added.

“Consumers are likely to expect crypto and stablecoins to feel as safe and usable as everyday money,” he said. “The risk is that familiarity becomes conflated with centralisation, even though the original value of crypto lies in giving users genuine control rather than simply better interfaces.”

Over the past few years, PayPal has focused on integrating crypto and stablecoins directly into its payments and settlement infrastructure, rather than treating digital assets as standalone products.

The company has expressed these initiatives through a series of incremental expansions across payouts, merchant acceptance, and on-chain settlement.

In late July, it enabled merchants to accept cryptocurrencies such as Bitcoin and Ethereum at checkout, integrating digital assets into its merchant payments stack. Transactions are converted at the point of sale, allowing merchants to receive fiat.

The company has also broadened PYUSD’s blockchain footprint by deploying it on networks such as Tron and Avalanche, increasing the token’s availability across on-chain environments. The expansion aimed to support wider circulation and settlement use.

Earlier this month, the company enabled U.S. YouTube creators to receive earnings through the token, extending it to creator payouts and settlement. The move placed PYUSD directly into existing payment flows.