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- SEC grants Paxos authority to clear and settle securities trades.
- Approval follows years of blockchain settlement testing with institutions.
- Paxos expands regulated market infrastructure as blockchain adoption grows.
Paxos Securities Settlement Company has received a registration as a securities clearing agency from the U.S. Securities and Exchange Commission, enabling the company to clear and settle eligible security transactions. The approval will provide Paxos with a greater presence in regulated financial markets and increase the company’s footprint of providing blockchain-based infrastructure services.
On Thursday, Paxos announced the approval as a significant advancement toward making blockchain technology more accessible to traditional capital markets. The company said it’s “the first blockchain-native company to be registered as a clearing agency by the SEC under the Securities Exchange Act of 1934.
Paxos Securities Settlement Company’s registration enables it to offer services at the core of securities trading operations. Clearing agencies assist in facilitating the smooth and safe processing of securities and funds, as well as ensuring accurate execution of transactions between parties.
The approval came after seven years of working with regulators, Charles Cascarilla, co-founder and chief executive officer of Paxos, said. With the registration, the company will be able to offer a more comprehensive infrastructure platform for financial institutions looking at blockchain technology, he added.
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Blockchain Settlement Model Gains Regulatory Recognition
The SEC approval follows years of testing carried out by Paxos with key financial institutions. The company has been running pilot programs since 2020, which include clearing and settlement of U.S. equities under SEC no action relief. Those programs showed that blockchain technology can provide more efficient and cost effective settlement operations in post trade, according to Paxos. Furthermore, the company claimed that blockchain infrastructure can be used to enable same-day settlement, which can help shorten the delays experienced in traditional systems.
The approval comes at a time when financial firms are also keen on developing tokenized assets and digital market infrastructure. As such, there is a need for regulated providers that can integrate blockchain with current financial systems. The registration is an important part of the financial market infrastructure, as the use of blockchain continues to grow in the securities industry, Paxos said.
Besides, the company goes into this new stage with a proven track record in digital finance. Paxos has teamed up with entities such as PayPal, Interactive Brokers, Mastercard and Mercado Libre. The company also releases some of its digital assets such as Paypal USD and Pax Gold.
Expanding Services for Institutional Markets
The interest of institutions in financial infrastructure built on blockchain has grown, with companies looking for more efficiency in the trade processing and settlement. In this context, regulated firms that are able to operate in both physical and virtual markets have become more prominent.
The new registration will enable Paxos to evolve from providing digital asset services to also underpinning the fundamental operations of securities markets. Additionally, it puts the company in a better position to help with future advances in tokenized securities and blockchain-based settlement systems.
The SEC’s decision provides Paxos with direct authority to clear and settle eligible securities trades in the United States. The authorization adds to the company’s growing capabilities in the growing blockchain integration with traditional finance, after years of pilot initiatives.
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