Paxos outlines three operating models for banks and fintechs offering digital assets: build in-house, stitch vendors or use one regulated partner.

Paxos says banks and fintechs launching digital asset services generally face three operating-model choices: build the stack in-house, stitch together specialist vendors, or use one full-stack regulated partner that provides custody, execution, settlement and compliance behind the institution’s brand. The company’s case for the framework is that the trade-off set is less about whether to offer crypto and more about how much of the operating burden the institution wants to retain.

In the source material published by Paxos on Tue, 13 Oct 2026, the in-house model gives an institution maximum control but requires the longest build time and the largest upfront investment. Paxos describes the hybrid model as faster to launch and more flexible, but dependent on the institution to manage vendor integrations and the seams between them. The full-stack partner model is presented as the fastest route to market, with one regulated counterparty accountable for the core infrastructure.

Paxos says the same five operating layers appear in each approach: licensing, custody, execution, settlement and compliance. The difference is how many of those layers the institution runs itself and how much complexity it is prepared to own. The company also argues that some institutions may start with one model and later move to another, for example by launching with a partner and then building more capability internally over time.

The post frames the choice as a response to competitive pressure from digital-native platforms.

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