Paxos Securities Settlement Company, LLC (PSSC) received temporary registration as a clearing agency from the U.S. Securities and Exchange Commission on May 28, 2026, under Section 17A of the Securities Exchange Act of 1934. The registration makes PSSC the first and only blockchain-native firm au...
"Our clearing agency registration is the result of seven years of work with the SEC, beginning with our No-Action Letter in 2019." — Charles Cascarilla, CEO and Co-Founder, Paxos
Paxos Securities Settlement Company, LLC (PSSC) received temporary registration as a clearing agency from the U.S. Securities and Exchange Commission on May 28, 2026, under Section 17A of the Securities Exchange Act of 1934. The registration makes PSSC the first and only blockchain-native firm authorized to operate as a central securities depository for U.S. equities — a function held exclusively by the Depository Trust & Clearing Corporation (DTCC) and its subsidiaries since the 1970s.
The approval ends a seven-year regulatory process that began with a no-action letter in 2019, continued through a live settlement pilot launched in February 2020 with Bank of America, Credit Suisse, Societe Generale, and Nomura's Instinet, and culminated in full application proceedings initiated in November 2025. PSSC can now provide delivery-versus-payment (DVP) clearance and settlement for eligible U.S. equities on a same-day (T+0) basis, compared to the industry-standard T+1 cycle that took effect in May 2024.
The scale of the incumbent is enormous. DTCC's Depository Trust Company subsidiary holds $100.3 trillion in assets under custody as of mid-2025, processes roughly $3.7 quadrillion in securities transactions annually, and generated $2.49 billion in revenue in 2024. Paxos is not replacing that infrastructure — it is offering a parallel, blockchain-native rail for a subset of liquid U.S. equities. The economic significance lies in what faster settlement unlocks: reduced counterparty risk, lower margin requirements, and freed capital that currently sits locked in the settlement window.
On May 28, 2026, the SEC published an order in the Federal Register granting PSSC temporary registration as a clearing agency. The order was filed under Release No. 34-104977, File No. 600-39. PSSC is now authorized to clear and settle transactions in eligible securities and to function as a central securities depository — recording ownership and settling trades on a permissioned blockchain.
The registration falls under Section 17A of the Securities Exchange Act, the same statutory framework governing DTCC's subsidiaries (DTC, NSCC, and FICC), the Options Clearing Corporation (OCC), and ICE Clear Credit, which received its own Section 17A registration in January 2026 for U.S. Treasury clearing. The SEC's decision to grant blockchain-native infrastructure the same regulatory classification as legacy clearing agencies represents a structural shift in how post-trade plumbing is governed.
PSSC is distinct from Paxos Trust Company, which holds an OCC national trust charter and issues stablecoins (PYUSD for PayPal, USDG for the Global Dollar Network). The clearing agency registration is held by a separate subsidiary purpose-built for equities settlement.
| Date | Event | |------|-------| | 2019 | SEC issues no-action letter allowing Paxos to conduct limited feasibility study of blockchain-based settlement without clearing agency registration | | February 2020 | Live settlement pilot launches; Paxos begins daily clearing and settlement of U.S. equities under no-action relief | | May 2021 | Bank of America joins pilot, becoming fourth major institution after Instinet (Nomura), Credit Suisse, and Societe Generale | | May 2022 | Paxos partners with State Street to integrate custodial services into the settlement platform; Credit Suisse participates in T+0 pilot | | November 2025 | SEC institutes proceedings to determine whether to grant or deny PSSC's application for registration (File No. 600-39) | | March 11, 2026 | SEC responds to application | | May 28, 2026 | Federal Register publishes order granting temporary registration |
The pilot phase was operationally meaningful. Paxos demonstrated same-day settlement for a small set of liquid U.S. equities across multiple broker-dealers. In one documented test, two trades executed during the trading day — including one at 3:00 PM ET — were settled by 4:30 PM ET the same day, according to reporting by Decrypt.
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DTCC's dominance in U.S. post-trade infrastructure is not easily overstated.
DTCC is also pursuing its own tokenization strategy. In April 2025, the company outlined plans to bring portions of its infrastructure on-chain, filing patents related to tokenized global assets. From Q2 2026, DTCC's equities clearing subsidiary will extend clearing hours, subject to regulatory approval.
Paxos is not competing on scale. It is competing on settlement speed, cost structure, and the economic value of capital freed from the settlement cycle.
The economic case for T+0 settlement centers on locked capital. Under the T+1 regime (effective May 2024), DTCC's National Securities Clearing Corporation (NSCC) requires margin deposits from clearing members to cover counterparty risk during the settlement window. DTCC estimated that the move from T+2 to T+1 reduced required margin deposits at NSCC by approximately 25-30%.
T+0 eliminates the settlement window entirely. If a trade clears and settles within the same day, the counterparty risk approaches zero, and the corresponding margin requirement drops accordingly. For large institutional participants executing billions in daily equity trades, even a single day of freed capital translates to meaningful reduction in funding costs.
The question is whether institutions will route volume through PSSC to capture this benefit. The infrastructure exists. The regulation exists. The economic incentive is quantifiable. What remains is adoption — broker-dealers must integrate with PSSC, and the operational overhead of maintaining a second clearing relationship alongside DTCC must be justified by the capital savings.
Paxos has positioned itself at the intersection of traditional finance and blockchain infrastructure across multiple product lines:
The clearing agency registration adds a layer to this stack. A single regulated entity can now provide stablecoin issuance, crypto brokerage infrastructure, and traditional equities settlement — all on blockchain rails. Whether this vertical integration creates meaningful value or simply satisfies a niche depends on institutional adoption.
The Federal Register order specifies "temporary registration," not permanent. This is notable. Under Section 17A, the SEC can grant temporary registration while continuing to evaluate an applicant's compliance with the full statutory requirements. The no-action letter that preceded this registration was also a stepwise mechanism — granting limited operational authority while the SEC assessed risks.
Temporary registration carries ongoing regulatory oversight. The SEC retains the authority to impose conditions, require modifications to PSSC's rules or operations, or ultimately deny permanent registration. For institutional participants evaluating whether to route settlement volume through PSSC, the temporary status introduces a layer of uncertainty about the permanence of the arrangement.
Paxos's public communications describe the registration as "clearing agency registration" without the "temporary" qualifier. The company's press release states PSSC is "the only blockchain-native firm approved by the SEC as a registered clearing agency." This framing is accurate — temporary registration is still registration — but the distinction is worth tracking.
Paxos is not the only entity building blockchain-based post-trade infrastructure. DTCC itself has invested in tokenization and on-chain settlement capabilities. ICE Clear Credit received Section 17A registration in January 2026 for U.S. Treasury clearing. Traditional custodians and clearinghouses are upgrading rather than standing still.
The structural question is whether blockchain-native clearing creates a fundamentally different cost structure or merely incremental improvement over modernized legacy systems. The pilot data suggests T+0 is technically achievable. The T+1 transition already demonstrated that compressed settlement reduces margin requirements by 25-30%. Eliminating the remaining day could yield further capital savings, but the magnitude depends on trade volumes routed through the new infrastructure.
For the broader Web3 ecosystem, the PSSC registration represents something measurable: a blockchain-native company has satisfied the same regulatory requirements as DTCC's subsidiaries to operate at the core of U.S. securities infrastructure. This is not a sandbox, not a pilot, and not a no-action letter. It is a registered clearing agency operating under Section 17A.
The Paxos clearing agency registration is a structural event, not a market event. No equities are being rerouted tomorrow. No DTCC revenue is at immediate risk. The $100.3 trillion depository will continue to process the vast majority of U.S. equity settlements for the foreseeable future.
What changed on May 28, 2026 is that the regulatory barrier to entry — the single largest moat protecting the DTCC's post-trade monopoly — was breached for the first time by a blockchain-native firm. The SEC evaluated PSSC against the same Section 17A standards it applies to DTC, NSCC, and FICC, and granted registration.
The economic value of this development will be determined by adoption. If institutional participants route meaningful volume through PSSC to capture T+0 capital savings, the clearing market becomes competitive for the first time in decades. If they do not, PSSC remains a regulatory milestone with limited practical impact. The infrastructure is built. The regulation is secured. The capital efficiency argument is straightforward. What remains is execution.