Paxos unit registered by SEC as first blockchain clearing agency

Paxos’ subsidiary, Paxos Securities Settlement Company (PSSC), received registration from the U.S. Securities and Exchange Commission on Thursday as a clearing agency under the Securities Exchange Act of 1934. The registration allows PSSC to provide clearing and settlement services for eligible securities transactions in the U.S.

The clearance formalizes PSSC’s role in post-trade infrastructure and places its operations under the rules and oversight that apply to registered clearing agencies. Paxos said PSSC can operate its native blockchain infrastructure to match trades, guarantee settlement and facilitate delivery of securities and funds for transactions that meet regulatory and technical standards.

Paxos has engaged with the SEC for seven years to secure the registration. The company has run pilots of blockchain-based clearing and settlement for U.S. equities since 2020 under the SEC’s no-action relief, involving major global financial institutions. Paxos reported that those pilots produced same-day settlements and lower operational costs compared with traditional post-trade processes.

Charles Cascarilla, Paxos’s CEO and co-founder, described the registration as the result of seven years of work with the SEC and said it allows the firm to offer a broader infrastructure for partners as market practices and blockchain technology change. The company also issued a statement calling the approval a key element of market infrastructure as blockchain and traditional capital markets converge.

Paxos maintains commercial relationships with payment and brokerage firms and e-commerce platforms, including PayPal, Interactive Brokers, Mastercard and Mercado Libre. The firm issues digital assets such as PayPal USD (PYUSD) and Pax Gold (PAXG). Paxos said the clearing-agency registration creates a regulated path for blockchain-based post-trade activity in the U.S.

The SEC registration subjects PSSC to reporting, operational and risk-management requirements that govern U.S. clearing agencies. Paxos can now offer clearing and settlement services under that regulatory framework, using blockchain technology where transactions and systems meet applicable standards.