On May 28, 2026, the U.S. Securities and Exchange Commission granted Paxos Securities Settlement Company (PSSC) registration as a clearing agency under Section 17A of the Securities Exchange Act of 1934. PSSC is the first and only blockchain-native firm registered to operate as a central securiti...
"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, Paxos
On May 28, 2026, the U.S. Securities and Exchange Commission granted Paxos Securities Settlement Company (PSSC) registration as a clearing agency under Section 17A of the Securities Exchange Act of 1934. PSSC is the first and only blockchain-native firm registered to operate as a central securities depository in the United States, placing it alongside the Depository Trust & Clearing Corporation (DTCC) — the entity that has dominated U.S. post-trade infrastructure since its designation as a systemically important financial market utility under Dodd-Frank in 2012.
The registration is not a pilot. It is not a no-action letter. It is a full regulatory license to clear and settle U.S. equities on blockchain rails, with same-day (T+0) settlement capability. DTCC currently custodies over $114 trillion in securities and processes approximately $4.7 quadrillion in transactions annually. Paxos is now authorized to compete for a share of that flow.
The approval arrives alongside two parallel developments: DTCC's own October 2026 launch of a tokenized securities platform built in partnership with 50+ firms including BlackRock, Goldman Sachs, and JPMorgan; and the SEC's March 2026 approval of Nasdaq's rule change enabling trade-by-trade selection of tokenized settlement. Together, these three developments mark the most significant structural shift in U.S. equities settlement infrastructure in decades.
Paxos's clearing agency registration followed a seven-year regulatory engagement with the SEC:
The timeline underscores the regulatory burden of entering U.S. clearing infrastructure. No blockchain firm had previously achieved full clearing agency registration. The pilot's institutional participant list — featuring three top-20 global banks by assets — provided the operational track record the SEC required.
PSSC is now authorized to:
The settlement mechanism is atomic: securities delivery and cash payment occur simultaneously on-chain, eliminating the overnight settlement window where counterparty risk exists under T+1. This architectural difference is not incremental. Under T+1, a broker that sells shares to a counterparty faces approximately 16 hours of exposure between trade execution and final settlement. Under Paxos's T+0 atomic model, that exposure window collapses to the duration of the on-chain transaction — typically seconds.
Paxos operates under regulatory oversight from the SEC (U.S.), the Office of the Comptroller of the Currency (U.S.), FIN-FSA (Europe), and the Monetary Authority of Singapore (MAS). The multi-jurisdiction licensing positions PSSC for potential cross-border settlement — an area where current infrastructure imposes multi-day delays and significant friction costs.
DTCC has not been passive. The incumbent is executing its own blockchain strategy on a parallel timeline:
The platform was shaped with input from over 50 firms, according to DTCC, including BlackRock, Goldman Sachs, JPMorgan, and crypto-native firms Anchorage and Circle.
Frank La Salla, DTCC President and CEO, stated: "We believe tokenization will significantly change how markets work and operate, bringing new levels of liquidity, transparency and efficiency."
The critical distinction: DTCC's approach tokenizes existing assets within its custody framework. DTC remains the source of settlement finality and official records. Paxos's model replaces the legacy rails entirely — settlement occurs natively on blockchain, with PSSC as the registered depository.
DTCC's multi-chain strategy also includes Digital Asset's Canton Network for institution-focused applications. The Stellar integration marks an expansion into public blockchain infrastructure, a move that would have been inconceivable two years ago.
On March 18, 2026, the SEC approved Nasdaq's proposed rule change (File No. SR-NASDAQ-2025-072) enabling trading of certain securities in tokenized form during the DTC pilot.
Key parameters:
The rule creates a dual-track system: the same security can settle through legacy infrastructure or blockchain rails, determined at the individual trade level. This opt-in model reduces migration risk but creates operational complexity for brokers who must support both pathways.
The U.S. transitioned from T+2 to T+1 settlement in May 2024. The move reduced margin requirements at the National Securities Clearing Corporation (NSCC) and lowered systemic counterparty exposure. Paxos's T+0 capability pushes the same logic further:
| Metric | T+1 (Current) | T+0 (Paxos) | |--------|---------------|--------------| | Settlement window | ~16 hours | Seconds | | Counterparty exposure | Present | Eliminated (atomic) | | Margin requirements | Reduced from T+2 | Potentially further reduced | | Failed trade risk | Present | Eliminated by design | | Operational hours | Business hours | 24/7 capable |
The economic value of eliminating the settlement gap is measurable. Failed trades in U.S. equities cost the industry an estimated $900 million annually in operational overhead, according to a 2023 report from the DTCC's own subsidiary, ITP (Institutional Trade Processing). Atomic settlement eliminates this category of cost entirely.
Capital efficiency gains are equally significant. Under T+1, clearing members must post margin with NSCC to cover settlement exposure during the overnight window. Under T+0 atomic settlement, the margin requirement for the covered exposure falls to near-zero for settled trades. For large broker-dealers managing billions in daily flow, the freed capital has direct balance-sheet implications.
The counterargument: T+0 requires pre-funding. A buyer must have both cash and settlement infrastructure ready at execution time. This shifts liquidity pressure from the post-trade window to the pre-trade window — a structural trade-off that may disadvantage smaller participants who rely on the T+1 settlement gap to source funding.
Paxos's broader institutional relationships extend beyond the settlement pilot:
The settlement pilot specifically involved Bank of America, Credit Suisse, Société Générale, and Instinet — all firms with high daily trade volumes and direct exposure to settlement costs. Their participation provided the SEC with the operational evidence required to move from no-action relief to full registration.
According to analysis from Bernstein, the tokenized real-world asset (RWA) market has reached $51 billion, with Figure Technologies leading at $18 billion in tokenized assets. However, these figures are concentrated in private credit and real estate. Tokenized public equities remain in early-stage infrastructure deployment — the domain where Paxos, DTCC, and Nasdaq are now competing.
The Paxos approval sits within a broader 2026 regulatory framework that has become materially more permissive toward blockchain-based financial infrastructure:
The Peirce remarks, while delivered in a personal capacity, signal an emerging regulatory philosophy: infrastructure neutrality. Under this framework, the blockchain rail itself is not the regulated entity — the actors who exercise control, custody, or discretion over assets are. This philosophy is consistent with the Paxos model, where PSSC operates as the regulated clearing agency while the underlying blockchain serves as neutral settlement infrastructure.
The CLARITY Act, currently on the Senate floor, would formalize stablecoin regulation and adjacent market structure elements. If passed, it would provide additional statutory grounding for the regulatory approach already being implemented through SEC and CFTC interpretive guidance.
Concentration risk: Paxos's registration is limited in scope. It covers eligible securities and operates on a permissioned blockchain. Expanding to cover the breadth of DTCC's product set — fixed income, derivatives, mutual funds — would require additional approvals.
Liquidity fragmentation: Two competing settlement systems create potential for fragmented liquidity. If some participants settle on DTCC rails and others on Paxos, the market could face bifurcated settlement pools with reduced netting efficiency.
Pre-funding requirement: Atomic T+0 settlement requires both counterparties to have assets available at execution. This eliminates the liquidity buffer that T+1 provides and may increase intraday funding pressure on smaller market participants.
Operational risk: Blockchain infrastructure introduces new failure modes — smart contract bugs, consensus delays, key management failures — that are distinct from the legacy risks managed by DTCC's established systems. Paxos's multi-year pilot provides operational track record, but the system has not yet been tested at peak volume scale.
Regulatory uncertainty: The registration is described as temporary in some filings. The durability of the license depends on continued regulatory alignment, which could shift with changes in SEC leadership or Congressional action.
The U.S. equities settlement market has operated as a regulated monopoly for over a decade. That structure is now formally broken. Paxos holds a full clearing agency license. DTCC is deploying tokenization across public and private chains. Nasdaq has approval to let investors choose blockchain settlement on a per-trade basis.
The question is no longer whether blockchain will handle U.S. equities settlement. Three parallel tracks — a blockchain-native CSD (Paxos), an incumbent tokenization platform (DTCC), and an exchange-level opt-in mechanism (Nasdaq) — are converging on the same outcome from different starting positions.
The economic value proposition is measurable: eliminated counterparty exposure, reduced margin requirements, and the removal of an estimated $900 million in annual failed-trade costs. The trade-off is pre-funding pressure and potential liquidity fragmentation.
For institutional participants, the calculation is straightforward: which settlement rail offers the lowest total cost of ownership at acceptable operational risk. That competition — between a 50-year-old incumbent managing $114 trillion and a seven-year-old startup that just earned the right to compete — will determine whether blockchain-based settlement remains an alternative or becomes the default.