Paxos becomes first blockchain-native clearing agency approved by SEC

Paxos Securities Settlement Company (PSSC) has secured registration with the U.S. Securities and Exchange Commission as a clearing agency, making it the first blockchain-native firm authorized to provide clearing and settlement services for U.S. equities [1]. The approval follows a seven‑year regulatory engagement that began with a 2019 SEC no‑action letter and a pilot that launched in February 2020 [3].

Key takeaways

• PSSC is the only blockchain-native firm approved as a registered clearing agency under Section 17A of the Securities Exchange Act [2].
• The SEC registration allows Paxos to operate as a central securities depository and offer same‑day (T+0) settlement for eligible securities [4].
• The approval caps a regulatory journey that started with a 2019 no‑action letter and a pilot that demonstrated same‑day settlement and cost reductions [1].
• Paxos’ blockchain clearinghouse can now serve banks and broker‑dealers seeking to build crypto‑based post‑trade infrastructure [1].
• The move positions Paxos alongside legacy providers such as the Depository Trust & Clearing Corporation (DTCC) [4].

SEC registration and the path to approval

The SEC’s order grants PSSC temporary registration as a clearing agency, enabling it to function as a central securities depository while meeting ongoing regulatory requirements [3]. Paxos describes the milestone as the culmination 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” [1]. The pilot, which began in February 2020, has been clearing and settling U.S. equities daily under SEC no‑action relief, and a 2022 partnership with State Street achieved same‑day settlement (T+0) for stock trades [3].

Paxos’ CEO and co‑founder Charles Cascarilla emphasized that the registration “allows us to offer the most complete infrastructure for our partners to continue evolving with the market and blockchain technology” [3]. The firm also notes that a registered, SEC‑approved blockchain clearinghouse removes barriers for banks and brokerages to develop crypto‑based infrastructure [1].

Why it matters

The approval signals a growing convergence of traditional capital markets and blockchain technology. By granting a blockchain-native firm the same clearing‑agency status as legacy players like the DTCC, the SEC is acknowledging that distributed‑ledger post‑trade infrastructure can meet regulatory standards while delivering operational efficiencies such as same‑day settlement and reduced costs [4]. Paxos’ ability to clear U.S. equities on blockchain may encourage other financial institutions to explore tokenized settlement solutions, potentially reshaping the post‑trade landscape.