The U.S. Securities and Exchange Commission on May 28, 2026, granted Paxos Securities Settlement Company, LLC (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 to hold this designation in the United...
The U.S. Securities and Exchange Commission on May 28, 2026, granted Paxos Securities Settlement Company, LLC (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 to hold this designation in the United States, placing it in the same regulated post-trade infrastructure category as the Depository Trust & Clearing Corporation (DTCC), which processed approximately $4.7 quadrillion in securities transactions in 2025.
The registration converts a seven-year regulatory engagement — beginning with a 2019 no-action letter and a February 2020 live settlement pilot — into permanent market plumbing. PSSC can now operate as a central securities depository (CSD) for eligible U.S. equities, offering same-day settlement on blockchain rails. The approval does not immediately threaten DTCC's dominance. DTCC settles roughly $19 trillion daily across more than 100 million transactions. But the registration establishes a second, blockchain-native clearing pathway within the existing regulatory framework — a structural development with implications for settlement costs, margin requirements, and capital efficiency across U.S. equity markets.
The path from concept to registration spanned seven years and three distinct phases:
Phase 1 — No-Action Relief (2019–2020) In 2019, SEC staff issued a no-action letter permitting Paxos to operate a blockchain-based settlement platform without full clearing agency registration. The relief was limited: a maximum of seven broker-dealer participants, restricted to the most actively traded and liquid U.S. equities, with a 1% cap on average daily volume per security.
Phase 2 — Live Pilot Operations (2020–2025) On February 20, 2020, Paxos launched its Settlement Service with Credit Suisse and Instinet (a Nomura subsidiary) as the first live participants. The service ran on a permissioned version of the Ethereum blockchain, enabling bilateral settlement of U.S. listed equity trades. Additional participants joined over the following 18 months: Bank of America, Societe Generale, Wedbush Securities, and ABN AMRO Clearing Chicago LLC (announced September 2021 as the sixth broker-dealer client). The pilot operated continuously, clearing and settling trades on a daily basis.
Phase 3 — Formal Registration (2025–2026) In December 2025, Paxos Trust Company converted to a national trust charter supervised by the Office of the Comptroller of the Currency (OCC). The SEC designated May 3, 2026, as the deadline for its approval decision on the clearing agency application. On May 28, 2026, the SEC granted the registration. According to the SEC's order, the registration is classified as temporary, though it carries the full legal authority of Section 17A registration.
As a registered clearing agency and central securities depository, PSSC is authorized to:
The registration does not currently extend to all security types. Coverage is limited to eligible U.S. equities — the same universe of securities Paxos has been settling since 2020.
The six-year pilot produced operational data that informed the SEC's registration decision. Participating institutions and their roles:
| Participant | Entry Date | Role | |---|---|---| | Credit Suisse | February 2020 | Launch partner | | Instinet (Nomura) | February 2020 | Launch partner | | Bank of America | 2020 | Pilot participant | | Societe Generale | 2020 | Pilot participant | | Wedbush Securities | 2020–2021 | Pilot participant | | ABN AMRO Clearing Chicago | September 2021 | Sixth broker-dealer |
The pilot operated under strict constraints: limited to highly liquid stocks, capped at 1% of average daily volume per security, and restricted to seven participants. These constraints will no longer apply under the full clearing agency registration, though the SEC's temporary classification suggests ongoing supervisory conditions may remain.
The settlement infrastructure used a private, permissioned Ethereum-based blockchain for bilateral trade settlement, allowing two parties to settle directly without routing through DTCC's National Securities Clearing Corporation (NSCC).
The U.S. equity market transitioned from T+2 to T+1 settlement on May 28, 2024. The SEC estimated this change reduced the volatility component of clearinghouse margin requirements by up to 41% in extreme scenarios. DTCC estimated the T+2-to-T+1 move freed over $20 billion in margin requirements across the industry.
Paxos's infrastructure enables T+0 — same-day settlement. The economic implications of a further reduction from T+1 to T+0:
Capital efficiency gains. In traditional clearing, capital sits in clearing accounts to cover potential settlement failures during the window between trade and settlement. Same-day settlement reduces this window to near-zero, releasing trapped capital.
Reduced counterparty risk. Shorter settlement windows lower exposure to price volatility between execution and settlement. With atomic settlement on blockchain, the securities and cash legs can settle simultaneously (delivery-versus-payment), eliminating the risk that one leg settles while the other fails.
Operational cost reduction. Post-trade reconciliation — the process of matching records between counterparties, clearinghouses, and custodians — costs the industry billions annually, according to DTCC's own research. A shared ledger eliminates the need for separate record reconciliation.
Tradeoffs. T+0 settlement is not without costs. Netting efficiency decreases at shorter settlement intervals. Under T+1, the NSCC nets offsetting trades across the day before settling the net amount. T+0 settlement reduces the netting window, potentially requiring more capital in motion at any given time. International settlement mismatches also present challenges, as most non-U.S. markets still settle on T+2.
DTCC remains the dominant force in U.S. post-trade infrastructure. In 2025, its subsidiaries processed approximately $4.7 quadrillion in securities transactions — roughly 150 times U.S. GDP. Its depository subsidiary, DTC, provides custody and asset servicing for securities valued at $114 trillion from more than 150 countries.
DTCC has not ignored blockchain. In parallel with Paxos's registration:
Paxos does not need to replace DTCC to be significant. The argument for blockchain settlement rests on incremental adoption: if even a small percentage of U.S. equity settlement volume migrates to blockchain-native rails, it validates the infrastructure thesis. Paxos's existing client relationships — including PayPal, Interactive Brokers, Mastercard, and Mercado Libre — provide distribution channels, though these partnerships are primarily related to Paxos's stablecoin and crypto infrastructure businesses, not equity clearing.
Key financial and operational data points:
The company operates across three verticals: stablecoin issuance (USDP and white-label products such as PayPal's PYUSD), crypto brokerage infrastructure, and now registered securities clearing.
The Paxos registration arrives during a period of accelerated institutional blockchain adoption in post-trade infrastructure:
Visa reported its stablecoin settlement pilot reached a $7 billion annualized run rate as of April 2026, growing 50% quarter-over-quarter.
DTCC itself is deploying tokenization pilots on public blockchains, acknowledging the technology's utility for asset servicing even as it defends its settlement monopoly.
The security token market is projected to grow from $1.91 billion in 2026 to $17.44 billion by 2035, according to industry estimates — a 27% compound annual growth rate.
The SEC issued guidance in January 2026 clarifying rules for tokenized securities, signaling regulatory comfort with blockchain-based financial instruments under existing frameworks.
Paxos's clearing agency registration is distinct from tokenization. It applies blockchain to the settlement of traditional, non-tokenized equities — a more conservative but potentially more impactful application, since it addresses the existing $4.7 quadrillion settlement flow rather than a nascent tokenized asset market.
The SEC's registration of Paxos Securities Settlement Company creates a second, blockchain-native clearing pathway for U.S. equities within the existing regulatory framework. It does not displace DTCC. It does not guarantee adoption. What it does is remove the regulatory barrier that previously confined blockchain settlement to pilot status.
The market significance will be determined by adoption. If broker-dealers begin routing settlement volume through PSSC — even a fraction of the $19 trillion settled daily by DTCC — it establishes blockchain infrastructure as a permanent feature of U.S. equity market plumbing. The six institutions that participated in the pilot provide a starting base. Paxos's relationships with PayPal, Interactive Brokers, and Mastercard suggest distribution capacity exists.
The outstanding question is not whether blockchain can settle equities — the six-year pilot demonstrated that it can. The question is whether the capital efficiency gains of T+0 settlement outweigh the netting efficiency losses, and whether broker-dealers will bear the integration costs to find out.