The U.S. Securities and Exchange Commission (SEC) has registered Paxos Securities Settlement Company, LLC (PSSC) as a clearing agency under Section 17A of the Securities Exchange Act of 1934. This makes Paxos the first and only blockchain-native company authorized to provide clearing and settlement services as a central securities depository within the U.S. federal securities framework.
Seven-Year Regulatory Marathon Pays Off
CEO and co-founder Charles Cascarilla traced the milestone to a regulatory engagement that started seven years ago. After securing a no-action letter in 2019, Paxos began live daily clearing and settlement of U.S. equities in February 2020 with participation from major global financial institutions. By October 2021, the firm had filed a formal application for full equities clearing agency registration, framing accelerated settlement cycles as both a regulatory priority and a market-efficiency imperative. With the approval, PSSC can now clear and settle transactions in eligible securities and operate as a central securities depository — a function that puts it at the core of post-trade infrastructure, handling ownership transfer, settlement timing, and operational finality.
Pilot Proved Blockchain Settlement Works
From 2020 onward, operating under SEC no-action relief, Paxos demonstrated that blockchain-based post-trade infrastructure could deliver same-day settlement, cut costs, and boost operational efficiency within a regulated environment. Those years of pilot operations and regulatory engagement have now been converted into a standing license to operate as regulated financial market infrastructure.
Regulatory Turmoil Then Turnaround
The approval arrives under a starkly different regulatory backdrop than what Paxos navigated in recent years. In 2023, the SEC issued a Wells notice alleging that Paxos’ Binance USD (BUSD) stablecoin might be an unregistered security — a claim Paxos categorically rejected. The SEC probe was ultimately dropped in 2024 without charges. Separately, Paxos paid $26.5 million in penalties to the New York State Department of Financial Services over compliance failures tied to its BUSD partnership with Binance, plus committed another $22 million to strengthen compliance infrastructure. The clearing agency registration now transforms those years of regulatory friction into a formal market infrastructure license.
Paxos is regulated by the OCC in the U.S., FIN-FSA in Europe, and the MAS in Singapore. Its infrastructure underpins products for partners including PayPal, Interactive Brokers, Mastercard, and Mercado Libre. The SEC’s decision marks a watershed: for the first time, a blockchain-native firm has been brought inside the traditional clearing rulebook.