Paxos Secures SEC Approval for Blockchain-Based Securities Settlement

Paxos has achieved a major regulatory milestone after its subsidiary, Paxos Securities Settlement Company (PSSC), received full registration from the U.S. Securities and Exchange Commission (SEC) to provide securities clearing and settlement services. The approval marks a significant step forward for blockchain technology in traditional financial markets and strengthens Paxos’ position in the growing real-world asset (RWA) tokenization sector.

According to Paxos, PSSC has become the first blockchain-focused company authorized to operate as a central securities depository (CSD) for traditional equities in the United States. This places the company alongside established post-trade infrastructure providers such as the Depository Trust & Clearing Corporation (DTCC), while introducing blockchain-based efficiency to the settlement process.

The SEC’s approval removes a key obstacle to Paxos’ long-term vision of bringing institutional-grade tokenized assets to market. The new registration enables the company to offer regulated clearing and settlement services for digital asset transactions tied to traditional equities. This development creates a streamlined pathway for financial institutions seeking to participate in blockchain-powered capital markets.

Paxos already holds regulatory approvals from several major jurisdictions, including the U.S. Office of the Comptroller of the Currency (OCC), the Monetary Authority of Singapore (MAS), and Finland’s Financial Supervisory Authority (FIN-FSA) in Europe. The company also provides white-label blockchain infrastructure solutions used by major firms such as PayPal and Mastercard, allowing it to expand its services with regulated securities settlement capabilities.

The SEC first granted Paxos no-action relief in 2019, enabling the company to launch a live settlement pilot in early 2020. During that initiative, leading financial institutions, including Bank of America, Credit Suisse, and Societe Generale, participated in clearing and settling U.S. equity transactions through Paxos’ platform.

With its newly registered status, PSSC can bypass much of the legacy settlement infrastructure used in traditional markets. By leveraging blockchain as the settlement rail, eligible securities can be settled on the same day or nearly instantly, significantly reducing settlement delays. This approach can unlock capital, improve operational efficiency, and lower counterparty risk for institutional investors.

Although U.S. equity markets transitioned to a T+1 settlement cycle in 2024, many aspects of the traditional financial system still face inefficiencies related to delayed settlements and collateral requirements. Paxos’ blockchain-based framework aims to address these challenges by modernizing the post-trade process and accelerating the adoption of tokenized financial assets.