Paxos Wins SEC Approval to Clear U.S. Stocks on Blockchain

Paxos has received the green light from the U.S. Securities and Exchange Commission to operate as a clearing agency for American equities using blockchain. Their subsidiary, Paxos Securities Settlement Company, LLC (PSSC), is now officially registered under Section 17A of the Securities Exchange Act of 1934, becoming the first blockchain entity acknowledged as a central securities depository in the U.S. This development aligns Paxos with the established regulations of the Depository Trust & Clearing Corporation (DTCC). CEO Charles Cascarilla noted that this milestone came after seven years of working with the SEC, including a no-action letter in 2019 and a pilot program that started in February 2020 with major banks. Their system enables same-day or almost instant settlements, reducing capital lock-up and counterparty risks. Paxos is also licensed by various regulatory bodies and collaborates with companies like PayPal and Mastercard. Though the SEC registration is provisional, it sets the stage for Paxos to challenge DTCC's traditional framework.