Paxos Becomes First Blockchain-Native SEC Clearing Agency

Paxos has become the first blockchain-native firm to receive registration from the U.S. Securities and Exchange Commission as a clearing agency [1]. The company announced that its subsidiary, Paxos Securities Settlement Company (PSSC), received the approval to provide clearing and settlement services as a central securities depository in the United States [2].

Key takeaways

• PSSC is the first and only blockchain-native firm to be registered by the SEC as a clearing agency [2].
• The registration allows the firm to provide clearing and settlement services for transactions in eligible securities [2].
• The approval follows seven years of work with the SEC, including a 2019 no-action letter and a subsequent settlement pilot program [1].
• Paxos previously operated a blockchain-based settlement service for U.S. equities under SEC no-action relief starting in February 2020 [2].

A Path Toward Regulated Blockchain Settlement

The registration of PSSC under Section 17A of the Securities Exchange Act of 1934 marks a formal transition for the company’s infrastructure efforts [2]. Clearing agencies serve as essential financial intermediaries that verify trades, match buyers and sellers, and ensure the successful exchange of money and securities [1]. By operating as a registered clearinghouse, Paxos aims to remove barriers for banks and brokerages looking to utilize crypto-based infrastructure [1].

The company’s journey toward this registration began in October 2019, when the SEC issued a no-action letter allowing Paxos to pilot a blockchain-based settlement service for U.S. equities [1]. According to Paxos CEO and co-founder Charles Cascarilla, the pilot program, which launched in February 2020, successfully demonstrated that blockchain-based post-trade infrastructure could improve operational efficiency, reduce costs, and deliver same-day settlement within a fully regulated framework [2].

Why it matters

The approval represents a significant convergence between traditional capital markets and blockchain technology [1]. Paxos stated that this registration provides a "critical piece of financial market infrastructure" that allows the firm to offer a more complete suite of services to its partners [2].

This milestone follows a period of regulatory scrutiny for the company. In 2023, Paxos received a Wells Notice from the SEC regarding the issuance of the Binance USD (BUSD) stablecoin, which the agency considered an unregistered security [1]. The SEC eventually closed its investigation and issued a formal termination notice in 2024, stating it would not pursue enforcement action [1]. Additionally, Paxos reached a $48.5 million settlement with the New York Department of Financial Services in August 2025 regarding compliance issues related to BUSD [1]. With this new registration, Paxos continues to position itself as a regulated infrastructure provider for global enterprises, including partners such as PayPal, Mastercard, and Interactive Brokers [2].