Paxos has become the first blockchain company cleared by U.S. regulators to settle traditional stock trades on a blockchain. The Securities and Exchange Commission granted full registration to Paxos Securities Settlement Company, LLC (PSSC) as a clearing agency under Section 17A of the Securities Exchange Act of 1934, the firm said on May 29. The license makes PSSC the only blockchain-native firm authorized to act as a central securities depository for U.S. equities, putting it in the same regulated layer as the Depository Trust & Clearing Corporation (DTCC), the incumbent that settles nearly all American stock trades.
A clearing agency is the regulated middleman that finalizes a securities trade by transferring legal ownership of the asset and the cash to pay for it between buyer and seller. Until now, no blockchain firm held that status in the United States.
Key takeaways
- The SEC registered Paxos Securities Settlement Company as a clearing agency, a first for any blockchain firm in the U.S.
- PSSC can settle eligible securities the same day or near-instantly, collapsing the current one-day (T+1) settlement window.
- The designation places Paxos alongside DTCC in post-trade infrastructure and clears a path for tokenizing real-world assets at institutional scale.
- Paxos can bundle regulated stock clearing with the white-label rails it already runs for PayPal and Mastercard.
Published: May 30, 2026 14:00 UTC
What the approval changes
In U.S. capital markets, a stock trade executes in milliseconds, but final settlement, the actual swap of cash for legal ownership, runs through a centralized clearing house. That step almost always passes through the DTCC. Equity markets shortened the standard cycle to one business day, known as T+1, in 2024, yet collateral still sits locked while trades clear, and counterparty risk persists for the duration.
Paxos says its registration lets it bypass that legacy plumbing. Using a blockchain as the clearing rail, PSSC can settle eligible securities the same day or close to instantly, freeing capital that would otherwise be trapped between trade and settlement. For institutions moving large blocks of stock, faster settlement means less idle collateral and lower exposure to a counterparty failing before a trade closes.
The milestone follows a long regulatory runway. The SEC first granted Paxos no-action relief in 2019, which let the firm run a live settlement pilot in February 2020 that cleared daily U.S. equity trades for institutions including Bank of America, Credit Suisse and Société Générale. The clearing agency registration, confirmed in the SEC’s response to Paxos earlier this year and reported by CoinDesk, converts that pilot into a permanent, regulated business.
Why it matters for institutions
The approval removes a bottleneck for Paxos’s broader goal of tokenizing real-world assets (RWAs), the practice of issuing stocks, bonds and other traditional instruments as blockchain tokens. Tokenization without a regulated way to clear and settle the underlying securities leaves institutions stuck at the final step. A registered clearing agency gives them a compliant pipeline to settle tokenized equity trades end to end.
Paxos already holds banking and trust licenses from the U.S. Office of the Comptroller of the Currency, Singapore’s Monetary Authority and Finland’s FIN-FSA, and it runs white-label crypto infrastructure for PayPal and Mastercard. The clearing designation lets it offer regulated stock settlement next to those existing services, a combination no crypto-native competitor currently matches.
It also sets up direct competition with the DTCC, which processes the overwhelming majority of U.S. securities transactions. Paxos is not replacing that infrastructure overnight, but a regulated blockchain alternative gives banks and brokers a second venue built for faster settlement.
What comes next
The registration arrives during a stretch of expanding U.S. crypto market structure. The same week, the Commodity Futures Trading Commission approved the first regulated bitcoin perpetual futures contract, and the SEC has been weighing exemptions for tokenized stocks. It also follows a run of SEC crypto product approvals, including Nasdaq’s QBTC bitcoin index options. Whether traditional finance giants route real volume through Paxos rather than DTCC will be the test of how much the approval reshapes post-trade markets. Watch for the first institutional clients to move live settlement onto PSSC and for the SEC’s stance on tokenized securities, which would widen the pool of assets eligible to settle on-chain.
FAQ
What did the SEC approve for Paxos?
The SEC registered Paxos Securities Settlement Company as a clearing agency under Section 17A of the Securities Exchange Act. The status lets Paxos legally clear and settle U.S. stock trades, making it the first blockchain-native firm to operate as a central securities depository in the country.
How is blockchain settlement faster than the current system?
Traditional U.S. stock trades settle one business day after execution, the T+1 cycle adopted in 2024. Paxos uses a blockchain as the settlement rail, allowing eligible trades to finalize the same day or near-instantly, which frees collateral and cuts the time both sides carry counterparty risk.
Does this make Paxos a competitor to the DTCC?
Yes. The registration places Paxos in the same regulated post-trade layer as the Depository Trust & Clearing Corporation, which settles nearly all U.S. securities trades. Paxos offers a blockchain-based alternative, though it will need institutional clients to route meaningful volume through it to compete at scale.
