Paxos Securities Settlement Company, LLC secures temporary clearing agency registration from the U.S. Securities and Exchange Commission, introducing the first blockchain-native entity authorized to settle equities outside of legacy systems.
- Paxos Securities Settlement Company secures SEC approval as the first blockchain-native clearing agency authorized to settle U.S. equities.
- The conditional order ends a seven-year administrative review and shatters the Depository Trust and Clearing Corporation's nearly fifty-year market monopoly.
- Charles Cascarilla targets T+0 settlement speeds to eliminate counterparty risks and unlock millions in capital previously tied up in clearing funds.
The federal regulator issued the conditional order on May 27, 2026, ending an administrative review that spanned seven years. The landmark approval, published under SEC Release No. 34-105562, allowed the Paxos subsidiary to function as a registered central depository.
Wall Street’s back-office settlement infrastructure operated without any real competition for decades. Since the National Securities Clearing Corporation (NSCC) obtained its clearing agency registration in the late 1970s, the Depository Trust & Clearing Corporation (DTCC) held absolute dominion over the post-trade clearing pipeline for U.S. equities. No other company successfully challenged this highly centralized infrastructure until the Paxos application.
PSSC’s operational design relied on its proprietary Paxos Ledger, a private blockchain designed to settle trades on a same-day (T+0) basis. The technology represented a substantial upgrade over the traditional U.S. stock market, which only managed to compress its settlement cycle from two days to one day (T+1) in May 2024. The legacy infrastructure required broker-dealers to tie up millions of dollars in clearing fund deposits to cover multi-day counterparty risks, a structural constraint that on-chain delivery-versus-payment (DVP) settlement sought to eliminate.
The parent company laid the groundwork for the launch in October 2019 when it secured a staff no-action letter. The subsequent live pilot program commenced in February 2020, facilitating the clearing and settlement of actual U.S. common stock for prominent financial institutions, including Bank of America and Credit Suisse. The pilot successfully demonstrated that blockchain-native systems could handle post-trade operations under a fully regulated framework.
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👉 Submit Your PRPaxos Chief Executive Officer Charles Cascarilla explained the long-term operational strategy behind the regulatory clearance. “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,” Charles Cascarilla, CEO and Co-Founder of Paxos said.
“As a registered clearing agency, PSSC is able to provide clearing and settlement services for transactions in eligible securities. Most importantly, it allows us to offer the most complete infrastructure for our partners to continue evolving with the market and blockchain technology,” the CEO added.
To appease regulatory concerns over systemic risk, the subsidiary agreed to a strictly bounded ramp-up phase. According to the company’s amended Form CA-1 filing from February 27, 2026, the clearing house bound itself to delay live operations for at least ten months following the SEC’s order[7]. A subsequent 12-month quiet period limited the platform’s active network to a maximum of ten institutional participants and restricted overall transaction volumes.
A representative from the blockchain infrastructure project KiiChain remarked that the registration represented a meaningful step toward bringing securities settlement on-chain and strengthening the connection to legacy financial systems.
The temporary registration authorized PSSC to operate for up to 18 months, giving the company a narrow window to prove its structural resilience. To secure permanent registration, Paxos had to establish direct, functional links with legacy depositories like the DTC, ensuring full interoperability across both systems.
Chain Street’s Take
Wall Street’s clearing monopoly finally cracked. For decades, the DTCC operated as an untouchable utility, but the SEC’s approval of a blockchain native quietly acknowledged that legacy settlement systems can no longer keep up with the speed of digital capital.
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