The U.S. Securities and Exchange Commission has granted the first-ever blockchain-based clearing and settlement agency registration to Paxos Settlement and Clearing Services (PSSC) under Section 17A of the Securities Exchange Act. Until now, this segment was dominated by legacy giant DTCC (Depository Trust & Clearing Corporation).
Seven-Year Journey: From No-Action Letter to Full License
Charles Cascarilla, CEO and co-founder of Paxos, called the registration “the culmination of seven years of work,” starting with a No-Action Letter from the SEC in 2019. In February 2020, Paxos launched a live pilot with global financial institutions under special SEC permission, testing a blockchain clearing and settlement system for U.S. equities.
That pilot proved same-day settlement was achievable within full regulatory compliance. Compared to the traditional multi-day cycle, the Paxos solution delivered same-day delivery-versus-payment (DVP) while lowering costs and boosting operational efficiency.
Challenging DTCC’s Dominance
Clearing and settlement agencies act as intermediaries that match buyer-seller records, validate trade details, and ensure secure transfer of cash and assets — drastically reducing counterparty risk. Paxos PSSC now stands as a regulated blockchain alternative to DTCC within the SEC framework.
| Clearing & Settlement Entity | Infrastructure | Operating Model | Regulator | Location |
|---|---|---|---|---|
| Paxos PSSC | Blockchain | Same-day DVP | SEC | US |
| DTCC | Traditional finance | Multi-day batch | SEC | US |
Next Steps: Paving the Way for Digital Asset Products
With the license in hand, Paxos plans to offer direct clearing and settlement for selected securities transactions to financial institutions and accelerate the rollout of digital asset-related products. The company described the approval as “a legal and commercial foundation for future expansion.”
The news drew reactions from both crypto and traditional finance circles, widely seen as proof that regulators are beginning to embrace blockchain-based solutions in earnest. Observers believe the SEC nod could encourage more traditional players to adopt on-chain settlement infrastructure, further shortening settlement times and lowering systemic risk.