Paxos Secures Rare SEC Clearing Agency Status, Opening Door to Blockchain Settlement in Traditional Markets

On May 27, the SEC granted temporary registration to Paxos Securities Settlement Company, LLC as a clearing agency under Section 17A of the Securities Exchange Act of 1934. This approval, detailed in SEC Release No. 34-105562, positions Paxos as the only blockchain-native entity cleared to act as a central securities depository for U.S. securities. The registration caps seven years of engagement with regulators, beginning with a 2019 no-action letter that permitted a feasibility study of the Paxos Settlement Service. The pilot, launched in February 2020 and involving major firms like Bank of America and Credit Suisse, demonstrated the feasibility of daily settlement, including T+0 cycles. After filing its formal application in 2021 and navigating a lengthy review process that included multiple extensions, Paxos received approval just days before a new deadline. The temporary registration allows Paxos to expand operations beyond experimental limits, offering features such as multilateral netting, flexible settlement cycles, and lower operational costs compared to the long-standing dominance of the Depository Trust & Clearing Corporation (DTCC). The approval signals regulators' willingness to embrace blockchain technology when wrapped in proper controls, despite past regulatory scrutiny of Paxos's stablecoin business. While questions remain about scalability and market adoption, the registration establishes a regulated on-ramp for institutions seeking efficiency gains and introduces competition into the post-trade infrastructure layer of American capital markets.

(Source：Webpronews)