On May 28, 2026, the U.S. Securities and Exchange Commission granted Paxos Securities Settlement Company, LLC (PSSC) temporary registration as a clearing agency under Section 17A of the Securities Exchange Act of 1934. PSSC is the first and only blockchain-native firm authorized by the SEC to ope...
"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, Paxos
On May 28, 2026, the U.S. Securities and Exchange Commission granted Paxos Securities Settlement Company, LLC (PSSC) temporary registration as a clearing agency under Section 17A of the Securities Exchange Act of 1934. PSSC is the first and only blockchain-native firm authorized by the SEC to operate as a registered clearing agency and central securities depository (CSD) for U.S. equities.
The approval follows a seven-year regulatory process that began with a 2019 SEC no-action letter, progressed through a live pilot launched in February 2020 with participants including Bank of America, Credit Suisse, Instinet, Societe Generale, Wedbush, and ABN AMRO Clearing, and culminated in the formal registration published in the Federal Register on May 29, 2026. The milestone positions Paxos as the first direct blockchain-based competitor to the Depository Trust & Clearing Corporation (DTCC), which custodies $114 trillion in assets and processes approximately $4.7 quadrillion in annual transaction volume.
Paxos has raised more than $500 million from investors including Oak HC/FT, Declaration Partners, Founders Fund, and PayPal Ventures, and was last publicly valued at $2.4 billion in its 2021 Series D round. The company holds regulatory licenses from the OCC (U.S.), Singapore's MAS, and Europe's FIN-FSA.
The SEC's order, published in the Federal Register on May 29, 2026, grants PSSC temporary registration as a clearing agency. The "temporary" designation is a regulatory mechanism under Section 17A(b)(3) of the Exchange Act — it permits PSSC to operate as a registered clearing agency while preserving the SEC's procedural review rights. This is the same pathway used historically for other clearing agencies during initial registration periods.
PSSC is authorized to provide delivery versus payment (DVP) clearance and settlement services for eligible U.S. equities. It functions as a central securities depository, meaning it holds securities in book-entry form and processes transfers between participants. This places it in the same regulatory category as DTC, the DTCC subsidiary that serves as the primary CSD for U.S. securities markets.
The registration covers equities only. Fixed-income instruments, derivatives, and other asset classes are not included in the current scope. The SEC retains authority to revoke the temporary registration or impose additional conditions as it deems necessary.
The path from concept to registration spanned three distinct phases:
Phase 1: No-Action Letter (2019). The SEC's Division of Trading and Markets issued a no-action letter allowing Paxos to conduct a limited "feasibility study" of blockchain-based settlement without registering as a clearing agency. The letter permitted Paxos to operate a settlement service for a small set of liquid U.S. equities with a limited number of broker-dealer participants.
Phase 2: Live Pilot (February 2020 – May 2026). Under the no-action relief, Paxos launched live settlement operations in February 2020. The service operated continuously on a daily basis, clearing and settling U.S. equity trades using a permissioned blockchain as the settlement rail. Over six years of operation, the pilot demonstrated that blockchain-based post-trade infrastructure could deliver same-day settlement, reduce operational costs, and function within existing regulatory frameworks.
Phase 3: Formal Registration (May 2026). PSSC filed its application for clearing agency registration with the SEC, which was granted on May 28, 2026. The transition from no-action relief to full registration marks a shift from experimental status to permanent regulated infrastructure.
The seven-year timeline is notable. By comparison, new clearing agencies in traditional markets are exceptionally rare. The U.S. equities post-trade landscape has been dominated by DTCC and its subsidiaries for decades. The last significant new entrant to the clearing agency space was the Options Clearing Corporation's expansion, and that occurred within an existing regulatory entity. A blockchain-native firm achieving this status from scratch is without precedent.
Six broker-dealers participated in the Paxos settlement pilot:
| Participant | Type | Status | |---|---|---| | Bank of America | Global investment bank | Pilot participant since launch | | Credit Suisse | Global investment bank (now part of UBS) | Pilot participant since launch | | Instinet | Agency broker (Nomura subsidiary) | Pilot participant since launch | | Societe Generale | European investment bank | Pilot participant since launch | | Wedbush | U.S. broker-dealer | Pilot participant since launch | | ABN AMRO Clearing | European clearing firm | Joined as sixth participant (2021) |
The participant profile is significant. These are not small or experimental firms. Bank of America and Societe Generale are G-SIBs (Global Systemically Important Banks). Their willingness to settle live equity trades through a blockchain-based CSD for six years provides a data point that cannot be replicated in a sandbox or proof-of-concept.
Paxos has not publicly disclosed cumulative settlement volumes or notional values processed through the pilot. The company has stated that operations ran continuously on a daily basis without service interruptions, but specific throughput figures remain proprietary.
The core economic case for blockchain-based settlement centers on capital efficiency. In the current T+1 regime (implemented May 28, 2024), the National Securities Clearing Corporation (NSCC) requires member firms to post margin against unsettled trades. When the U.S. moved from T+2 to T+1, the NSCC Clearing Fund decreased by an average of $3.0 billion — a 23% reduction from the prior three-month average of $12.8 billion under T+2 — according to DTCC data.
DTCC further estimated that the T+1 transition reduced the volatility component of NSCC margin requirements by 41%, returning billions in liquidity to market participants.
Same-day settlement (T+0) would extend this logic further. If trades settle on the same day they execute, the margin requirement window compresses to hours rather than a full business day. The capital freed would depend on market volumes. With U.S. equity markets averaging approximately 19.4 billion shares per day in YTD 2026 (a 16.8% year-over-year increase, per SIFMA data), the margin locked against unsettled positions represents substantial capital.
However, the industry consensus — including from DTCC itself — is that a full-scale move to T+0 for all U.S. equities would require fundamental transformation of market infrastructure, including real-time funding, continuous net settlement, and changes to securities lending and borrowing workflows. Paxos does not need to win the entire market immediately. If it captures even a fraction of daily settlement volume at T+0 speeds, the margin savings for participating broker-dealers would be material.
According to Deutsche Bank research, in traditional equities, real-time T+0 is not considered feasible for the entire market. But tokenized representations of equities — which is precisely what Paxos operates — can achieve same-day settlement without requiring the rest of the market to change.
The competitive dynamic between Paxos and DTCC is asymmetric. DTCC processes approximately $4.7 quadrillion in annual transaction value across all services. Its DTC subsidiary custodies $114 trillion in assets. NSCC cleared a record $5.55 trillion in a single day on April 9, 2025, during a period of elevated volatility. No blockchain-based system has operated at remotely comparable scale.
Paxos is not attempting to replace DTCC wholesale. The strategy is to offer a parallel rail — a faster, cheaper settlement option for a subset of liquid U.S. equities, targeted at broker-dealers willing to opt into T+0 settlement for specific flows. This is a wedge strategy, not a frontal assault.
The competitive map for U.S. equities post-trade infrastructure now has three layers:
DTCC (Incumbent). $114 trillion in custody, $4.7 quadrillion in annual settlement. Operating T+1. Launching its own tokenization service (ComposerX) in July 2026 for Russell 1000, ETFs, and Treasuries — but as a record-keeping layer, not a settlement accelerator. Tokenized entitlements under the DTCC pilot will not carry settlement or collateral value during the initial phase.
Paxos (Challenger). Registered clearing agency operating on blockchain rails. Offering T+0 settlement for eligible equities. Six institutional participants in pilot. Scale unknown but operationally proven over six years.
Crypto-Native Platforms (Adjacent). Securitize (BlackRock's BUIDL, $2.5 billion AUM), Ondo Finance (~70% of on-chain tokenized equities), and others. These operate tokenized securities on public blockchains but outside the SEC's clearing agency framework. They serve a different market — on-chain composability and 24/7 trading — rather than direct competition with institutional settlement infrastructure.
The critical differentiator is regulatory status. Paxos now holds the same clearing agency registration as DTCC. It is not operating under an exemption, a sandbox, or a no-action letter. It is a registered CSD. This means broker-dealers using Paxos for settlement have the same regulatory certainty they have when using DTCC — a factor that matters far more to institutional compliance departments than settlement speed.
Paxos operates a diversified blockchain infrastructure business:
The company issues or operates infrastructure for multiple digital assets:
Enterprise partners include PayPal, Interactive Brokers, Mastercard, and Mercado Libre. The regulatory license portfolio — OCC (U.S.), MAS (Singapore), FIN-FSA (Europe) — makes Paxos one of the most broadly licensed blockchain infrastructure firms globally.
In December 2025, Paxos obtained OCC-regulated national trust status, which provides the regulatory foundation for its stablecoin issuance and now supports the broader institutional infrastructure strategy. The clearing agency registration adds a second critical regulatory pillar alongside the banking charter.
Several constraints temper the significance of the registration:
Temporary status. The SEC's order grants temporary registration, not permanent. The distinction matters procedurally — the SEC retains heightened review authority and can impose additional conditions or revoke the registration.
Scope limited to equities. The registration covers eligible U.S. equities only. Fixed income, options, and other instrument classes are excluded. Expansion would require additional SEC approval.
Unknown scale. Paxos has not disclosed settlement volumes from the pilot. Without volume data, it is impossible to assess operational capacity relative to DTCC's daily throughput of trillions of dollars.
Network effects favor the incumbent. DTCC's dominance is not merely regulatory — it is structural. Every major U.S. broker-dealer, bank, and exchange connects to DTCC. Paxos must persuade firms to maintain dual connectivity and route specific flows to a second CSD. The operational cost and complexity of this dual-rail approach is non-trivial.
Credit Suisse no longer exists independently. One of the six pilot participants — Credit Suisse — was absorbed by UBS in 2023. Whether UBS continues participation is unclear.
The registration has three structural implications for capital markets:
Competition in post-trade infrastructure is now real. For decades, DTCC operated as an effective monopoly in U.S. securities settlement. The existence of a registered blockchain competitor — even one operating at a fraction of DTCC's scale — introduces competitive pressure on pricing, innovation, and settlement speed. DTCC's own push into tokenization (ComposerX, Stellar integration) can be read partly as a competitive response to the threat Paxos represents.
The regulatory pathway is established. Other blockchain firms seeking to enter the clearing agency space now have a precedent. The seven-year timeline is long, but the path exists. SEC willingness to grant clearing agency registration to a blockchain-native firm signals regulatory acceptance of the technology for systemically important financial infrastructure.
T+0 moves from theoretical to operational. Academic and industry discussions about same-day settlement have been ongoing for years. Paxos now operates a registered clearing agency that can deliver it. The question shifts from "can blockchain settle equities in same-day?" to "how much volume will flow through blockchain rails at T+0?"
The SEC's decision to register a blockchain-native clearing agency for U.S. equities is a structural event in capital markets infrastructure. It does not end DTCC's dominance — the incumbent's scale, network effects, and regulatory entrenchment remain formidable. What it does is create an alternative rail that operates under the same regulatory framework, offering faster settlement for institutions willing to route flows through blockchain infrastructure.
The market is now watching two variables: how many broker-dealers will connect to PSSC as a registered clearing agency (beyond the six pilot participants), and what volume of daily equity settlement will move to T+0 blockchain rails. If Paxos can demonstrate material throughput at institutional scale, the implications extend beyond equities to every asset class that still settles on legacy timelines.
For the first time in decades, the post-trade monopoly has a registered competitor. The economic question is no longer whether blockchain can settle securities — it is how fast the market will adopt a second rail.