Paxos Gets SEC Green Light for Blockchain-Based Securities Settlement

TLDR

• Paxos Securities Settlement Company received SEC clearing agency registration.
• PSSC can now clear and settle eligible securities transactions in the U.S.
• Paxos says PSSC is the only blockchain-native SEC-registered clearing agency.
• The approval follows years of SEC engagement and a 2019 No-Action Letter.
• Paxos tested U.S. equities settlement under SEC no-action relief from 2020.

Paxos has secured a major U.S. regulatory approval for blockchain-based securities settlement. The company said its subsidiary, Paxos Securities Settlement Company, received SEC registration as a clearing agency. The approval allows PSSC to clear and settle eligible securities transactions under federal securities law.

Paxos Subsidiary Receives SEC Clearing Agency Registration

According to a Thursday official press release, Paxos announced that PSSC gained registration under Section 17A of the Securities Exchange Act of 1934. The company said the approval allows the subsidiary to provide clearing and settlement services in the United States. It also said PSSC can operate as a central securities depository for eligible securities transactions.

The company described PSSC as the only blockchain-native firm with SEC approval as a registered clearing agency. Paxos said the registration followed a long engagement with the regulator. The company linked the approval to work that began with an SEC No-Action Letter in 2019.

“Our clearing agency registration is the result of seven years of work with the SEC,” said Charles Cascarilla, CEO and co-founder of Paxos. He said the process included a settlement pilot with some of the world’s largest financial institutions. He added that the approval allows Paxos to offer more complete infrastructure to partners.

Paxos said PSSC can now support clearing and settlement for eligible securities transactions. The company said the approval strengthens its regulated infrastructure platform. It also said partners can use the system as they adapt to blockchain technology and market changes.

Paxos Builds on U.S. Equities Settlement Pilot

Paxos said PSSC has already tested blockchain-based settlement in live market activity. Beginning in February 2020, Paxos cleared and settled U.S. equities under SEC no-action relief. The company said leading global financial institutions took part in the daily settlement pilot.

The pilot focused on post-trade infrastructure for U.S. equities. Paxos said the program showed that blockchain-based systems could support same-day settlement. It also said the model could reduce costs and improve operational efficiency within a regulated framework.

The company said the SEC registration adds another capability to its infrastructure business. Paxos already provides blockchain infrastructure for enterprises that build and scale digital asset products. With PSSC registered, the company can now extend that platform into regulated securities settlement.

Paxos said the approval comes as blockchain technology and traditional capital markets continue to converge. The company has called the registration a critical piece of financial market infrastructure.

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