A Paxos subsidiary can offer clearing and settlement as a central securities depository in the U.S.
The U.S. Securities and Exchange Commission (SEC) has approved the first, and for now the only, blockchain-native clearing agency — the Paxos Securities Settlement Co., LLC (PSSC), a subsidiary of blockchain infrastructure platform provider Paxos, officials say.
PSSC, which will be governed by Section 17A of the Securities Exchange Act of 1934, is now able to “provide clearing and settlement services as a central securities depository in the United States,” according to Paxos. “The approval represents a critical piece of financial market infrastructure as blockchain technology and traditional capital markets continue to converge.”
“Our clearing agency registration is the result of seven years of work with the SEC, beginning with our No-Action Letter in 2019 and the settlement pilot we operated with some of the world’s largest and most sophisticated financial institutions,” explains Charles Cascarilla, CEO and co-founder of Paxos, in a prepared statement. “As a registered clearing agency, PSSC is able to provide clearing and settlement services for transactions in eligible securities.”
The PSSC registration follows “a multi-year track record in live clearing and settlement. Beginning in February 2020, under SEC no-action relief, Paxos operated the clearing and settling of U.S. equities on a daily basis with participation from top global financial institutions,” officials say. “This successfully demonstrated that blockchain-based post-trade infrastructure could deliver same-day settlement, reduce costs and improve operational efficiency within a fully regulated framework.”
Paxos is prudentially regulated by the Office of the Comptroller of the Currency (OCC) in the U.S., FIN-FSA in Europe, and the MAS in Singapore, officials say. Paxos has partnerships with global enterprises to tokenize, custody, and trade assets.
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