Paxos Becomes First Blockchain-Native Firm to Secure SEC…

The SEC has registered Paxos Securities Settlement Company as a clearing agency under federal securities law, making the blockchain infrastructure firm the first and only blockchain-native company approved to provide clearing and settlement services as a central securities depository in the United States. Paxos announced on May 28 that its subsidiary, Paxos Securities Settlement Company, LLC (PSSC), received the registration under Section 17A of the Securities Exchange Act of 1934. The approval places blockchain-based post-trade infrastructure inside the same regulatory framework that governs incumbent clearinghouses, a threshold no blockchain-native firm had previously crossed.

Seven Years of Regulatory Groundwork

CEO and Co-Founder Charles Cascarilla traced the milestone to a seven-year engagement with the SEC, beginning with a no-action letter in 2019 and a live settlement pilot conducted with some of the world’s largest financial institutions. “As a registered clearing agency, PSSC is able to provide clearing and settlement services for transactions in eligible securities,” Cascarilla said.

“Most importantly, it allows us to offer the most complete infrastructure for our partners to continue evolving with the market and blockchain technology.”

From February 2020, operating under SEC no-action relief, Paxos ran daily clearing and settlement of U.S. equities with participation from top global financial institutions—demonstrating that blockchain-based post-trade infrastructure could deliver same-day settlement, reduce costs, and improve operational efficiency within a regulated framework. Paxos had filed a formal application with the SEC for full equities clearing agency registration as far back as October 2021, framing accelerated settlement cycles as both a regulatory priority and a market-efficiency imperative. The registration grants PSSC the ability to act as a central securities depository, a function that puts it at the core of post-trade financial market infrastructure—handling ownership transfer, settlement timing, and operational finality after a trade executes.

A Regulatory Reversal in Context

The approval arrives against a sharply different regulatory backdrop than the one Paxos navigated in recent years. In 2023, the SEC issued a Wells notice to Paxos alleging that its Binance USD (BUSD) stablecoin may constitute an unregistered security—a position Paxos categorically rejected, arguing BUSD was not a security under federal securities law. The SEC investigation was ultimately dropped in 2024 without charges being filed. That same year, Paxos agreed to pay $26.5 million in penalties to the New York State Department of Financial Servicesover compliance failures tied to its BUSD partnership with Binance, alongside a $22 million commitment to strengthen its compliance infrastructure. The clearing agency registration converts years of pilot operations and regulatory engagement into a standing licence to operate as regulated financial market infrastructure. Paxos is regulated by the OCC in the United States, FIN-FSA in Europe, and the MAS in Singapore, and its infrastructure underpins products for partners including PayPal, Interactive Brokers, Mastercard, and Mercado Libre.