Paxos has received approval from the U.S. Securities and Exchange Commission to operate a blockchain-based clearing agency, becoming what the company says is the first blockchain-native firm authorized to provide central securities depository services in the country. The approval was granted to its subsidiary, Paxos Securities Settlement Company, allowing it to offer clearing and settlement services for securities transactions under SEC oversight.
The milestone follows a multi-year engagement with regulators that began in October 2019 with a no-action letter. That letter allowed Paxos to launch a pilot program in February 2020, testing blockchain-powered settlement for U.S. equities with major financial institutions such as Bank of America, Credit Suisse, and Societe Generale. Paxos said the pilot demonstrated same-day settlement and lower operational costs compared to traditional systems, which typically follow a T+1 cycle.
"Our clearing agency registration is the result of seven years of work with the SEC, starting 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," said Charles Cascarilla, co-founder and CEO of Paxos.
The registration gives traditional financial institutions a regulated path to use blockchain technology for post-trade operations. Clearing agencies sit between buyers and sellers, verifying trades, matching counterparties, and ensuring that cash and securities exchange correctly. Paxos said its blockchain-based system can support same-day settlement, reducing risk and operating costs while operating under existing regulatory rules.
The approval also expands Paxos’ infrastructure footprint. Beyond its settlement business, the company issues several digital assets including PayPal USD (PYUSD), Global Dollar (USDG), and Pax Gold (PAXG). Recent efforts by the firm, including a $12 million funding round for spin-off Paxos Labs in April 2026 from investors like Blockchain Capital and Uniswap Labs, have focused on infrastructure for institutional stablecoin adoption. The clearing agency registration is seen as a regulated foundation for banks, brokerages, and other institutions exploring blockchain-enabled market infrastructure.
Although the registration remains temporary and Paxos must continue meeting SEC rules, the decision marks a significant step in the convergence of traditional finance and blockchain technology. The company faced past regulatory scrutiny over Binance USD (BUSD) – including a 2023 SEC Wells Notice and a 2025 $48.5 million settlement with the NYDFS – but the investigation into BUSD was closed in 2024 with no enforcement action.
