SEC approves Paxos as first blockchain clearing agency

A blockchain-native firm has become the first of its kind to receive registration as a clearing agency from the U.S. Securities and Exchange Commission, a milestone that integrates digital asset technology into the core of regulated capital markets. The SEC granted the registration to Paxos Securities Settlement Company, a subsidiary of Paxos, authorizing it to provide clearing and settlement services as a central securities depository.

The approval, granted in late May, follows a seven-year regulatory engagement that began in October 2019 when the SEC issued a no-action letter. That allowed Paxos to launch a pilot program for a blockchain-based settlement service for U.S. equities in February 2020. The company stated the pilot, which involved major financial institutions, demonstrated the feasibility of same-day settlement, cost reductions, and improved operational efficiency within a regulated framework. Company CEO Charles Cascarilla said the registration is the result of that sustained work with the SEC and the operation of the settlement pilot with sophisticated financial institutions.

Clearing agencies perform critical post-trade functions, verifying transaction details,...