The Securities and Exchange Commission (SEC) granted Paxos Securities Settlement Company registration as a clearing agency, making Paxos the “first and only” blockchain-native firm approved to provide U.S. central securities depository services.
What just happened?
A seven-year regulatory marathon ends. This time, Paxos did not just get another state license or a ‘no-action’ letter. So far, the company secured full clearing agency registration from the SEC under Section 17A. That’s the same regulatory category as Depository Trust and Clearing Corporation (DTCC), thus the backbone of Wall Street‘s post-trade infrastructure.
Paxos’s CEO, Charles Cascarilla, called it the result of “seven years of work with the SEC, beginning with our No-Action Letter in 2019.” During that time, Paxos operated a live settlement pilot for U.S. equities with major global financial institutions. This proves that blockchain-based post-trade systems can deliver ‘same day’ settlement, lower costs, and better efficiency. Now that pilot has graduated into a permanent, registered reality.
What Paxos can actually do now
Let’s strip away the jargon. As a registered clearing agency, Paxos can now legally “clear and settle transactions for eligible securities (think equities, bonds, and other traditional assets), using blockchain infrastructure. For instance, they become a central securities depository, meaning they can hold assets and settle trades between counterparties without going through legacy systems.
For Paxos’s enterprise partners (already including PayPal, Interactive Brokers, and Mastercard), this unlocks a full-stack solution: issue digital assets, custody them, and now clear and settle them on a regulated blockchain rail. This would be like giving a fintech company the keys to the DTCC‘s playbook, except faster and programmable.
“Our clearing agency registration is the result of seven years of work with the SEC, beginning with our No-Action Letter in 2019 and the settlement pilot we operated with some of the world’s largest and most sophisticated financial institutions. As a registered clearing agency, PSSC is able to provide clearing and settlement services for transactions in eligible securities. Most importantly, it allows us to offer the most complete infrastructure for our partners to continue evolving with the market and blockchain technology.” – Charles Cascarilla, CEO and Co-Founder of Paxos.
How this changes market rules for Paxos
Before getting this green light, Paxos was basically just a mix of different regulated pieces, like:
- A trust company
- A crypto custodian
- A stablecoin issuer
But now, with a clearing agency license, they are officially plugged into the heart of traditional capital markets. This means any bank or broker can settle stock trades on a blockchain using Paxos without having to reinvent the wheel.
And for the rest of the crypto world, this is a huge signal: the SEC is actually cool with blockchain for post-trade matters, as long as companies/business put in the time and play by the rules. To this point, traditional finance (TradFi) on the blockchain just got an important boost.