Paxos Receives SEC Approval as Blockchain Clearing Agency

The U.S. Securities and Exchange Commission (SEC) has granted registration to Paxos Securities Settlement Company, LLC (PSSC) to operate as a clearing agency [1]. This regulatory milestone makes the Paxos subsidiary the first and only blockchain-native firm authorized to provide clearing and settlement services as a central securities depository in the United States [4].

Key takeaways

• The SEC registration allows PSSC to provide clearing and settlement services for eligible securities [1].
• Paxos is the first blockchain-native firm to receive this specific clearing agency designation from the SEC [2].
• The approval follows a multi-year pilot program that began in 2020, which utilized blockchain infrastructure to settle U.S. equities [3].
• The new status allows Paxos to compete with legacy post-trade frameworks like the Depository Trust & Clearing Corporation (DTCC) [3].

A seven-year path to regulatory approval

The registration is the culmination of seven years of collaboration between Paxos and the SEC [1]. The process began with a 2019 no-action letter that permitted the company to develop a live settlement pilot [2]. Starting in February 2020, Paxos operated this service with participation from major financial institutions, including Bank of America, Credit Suisse, and Societe Generale [3]. These trials were designed to demonstrate that blockchain-based infrastructure could successfully handle the clearing and settling of U.S. equities on a daily basis [1].

By operating as a registered clearing agency, PSSC can now bypass traditional settlement infrastructure [3]. While standard U.S. equity markets currently operate on a T+1 settlement cycle, the blockchain-based rail allows for same-day or near-instant settlement [3]. According to the company, this capability is intended to eliminate traditional settlement windows and free up capital that is otherwise locked in legacy systems [3].

Why it matters

The approval represents a significant convergence between traditional capital markets and blockchain technology [1]. By functioning as a central securities depository, Paxos aims to provide a more efficient alternative to legacy financial plumbing, which the company notes is often constrained by structural delays and counterparty risks [3].

This development also clears a regulatory bottleneck for the institutional tokenization of real-world assets [3]. Paxos, which is already regulated by the OCC in the U.S., the MAS in Singapore, and the FIN-FSA in Europe, plans to bundle this new clearing capability with its existing white-label infrastructure tools [3]. The company’s history with the SEC has included past challenges, such as a 2023 Wells Notice regarding the BUSD stablecoin, which the SEC closed in 2024 without pursuing enforcement action [2]. With this new registration, Paxos is positioned to integrate its blockchain solutions further into the broader financial services landscape [1].