Paxos secured U.S. Securities and Exchange Commission registration as a clearing agency on Thursday, becoming the first blockchain-native firm cleared to settle securities as a central depository.
Key Points:
- Paxos became the only blockchain-native firm approved by the SEC to operate as a U.S. central securities depository.
- The clearance caps a seven-year effort that began with a 2019 no-action letter and a 2020 settlement pilot.
- Regulators labeled the registration temporary, keeping ongoing conditions attached.
Paxos Clears Section 17A Hurdle
Paxos Securities Settlement Company, a unit of the New York firm, won registration under Section 17A of the Securities Exchange Act of 1934. The clearance lets it operate as a central securities depository, the back-office layer that records ownership and finalizes trades, a role Paxos says no other blockchain-native company holds in the United States.
A clearing agency sits at the center of every stock trade, verifying the deal, matching buyer and seller, then confirming that cash and the securities themselves change hands cleanly.
The SEC labeled the new registration temporary, a status that lets Paxos run the service while it continues to satisfy the agency's ongoing requirements. Its system settles trades on a private, permissioned ledger rather than on a fully public blockchain network, the company has said.
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Cascarilla Marks Seven-Year Push
Charles Cascarilla, the company's chief executive and co-founder, called the milestone the "result of seven years of work" with the agency. That effort began with a no-action letter the SEC granted in 2019, ahead of a settlement pilot involving some of the world's largest and most sophisticated financial institutions.
The registration drops a crypto-native firm into the post-trade plumbing of U.S. equity markets, a domain long dominated by legacy institutions. Paxos has run live clearing since February 2020 under no-action relief, settling U.S. equities on a daily basis with participation from large global institutions. The company says the approach can deliver same-day settlement, lower operating costs and cleaner record-keeping between brokers, custodians and other market participants.
Best known as a stablecoin issuer, Paxos also stands behind PayPal USD (PYUSD) and the gold-backed Pax Gold (PAXG). Banks and brokers chasing faster, cheaper settlement could now build on its regulated rails instead of building their own.
DTCC Rivalry Comes Into View
Incumbents are not standing still, with the Depository Trust & Clearing Corporation, Wall Street's main clearinghouse, recently revealing plans for its own tokenization service backed by some of the biggest names in finance.
Paxos has not always sat easily with Washington regulators. The firm drew a Wells Notice from the SEC in 2023 over Binance USD (BUSD), the stablecoin tied to the crypto exchange, only for regulators to close that investigation the following year. A $48.5M settlement with New York's financial regulator capped the long-running saga in August 2025, closing a tense chapter with state authorities.
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