Paxos Receives SEC Registration as First Blockchain-Based Clearing Agency
According to Paxos, securing approval as a clearing agency focused on blockchain technology marks a 'critical piece of financial market infrastructure' amid growing Wall Street adoption of cryptocurrency.
Stablecoin issuer and blockchain infrastructure platform Paxos has announced that it represents the first 'blockchain-native' company to receive registration from the US Securities and Exchange Commission as a clearing agency.
On Thursday, Paxos announced that its subsidiary entity, Paxos Securities Settlement Company, has earned distinction as 'the only blockchain-native firm' to receive SEC approval for offering clearing and settlement services in its capacity as a central securities depository within the United States.
The company highlighted that this approval constitutes a 'critical piece of financial market infrastructure' given the ongoing convergence between traditional capital markets and blockchain technology.
The role of clearing agencies is to ensure that securities transactions are executed properly. Since stock purchasers and sellers don't engage in direct trading, they require clearing and settlement intermediaries that confirm the transaction, pair the buyer with the seller, and subsequently guarantee the proper exchange of both securities and funds takes place.
Having an SEC-approved, registered blockchain clearinghouse eliminates obstacles for brokerages and banks seeking to develop crypto-based infrastructure.
The SEC granted a no-action letter to Paxos in October 2019, permitting the company to test a blockchain-based settlement service for equities in the United States, with the service going live in February 2020.
According to Paxos, the pilot program proved that post-trade infrastructure based on blockchain could enable same-day settlement, decrease costs and enhance operational efficiency while operating within a completely regulated framework.
"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, Paxos co-founder and CEO
Among the stablecoins and digital assets that Paxos issues are PayPal USD (PYUSD), Global Dollar (USDG) and Pax Gold (PAXG).
Under former chair Gary Gensler, the company experienced a turbulent relationship with the SEC, receiving a Wells Notice in 2023 when the agency indicated plans to recommend enforcement action regarding the issuance of Binance USD (BUSD), a stablecoin connected to crypto exchange Binance, which the SEC deemed to be an unregistered security.
At approximately the same time, Paxos received an order from the New York Department of Financial Services (NYDFS) to cease minting new BUSD.
In 2024, the SEC concluded its investigation and issued a formal termination notice, declaring it would not move forward with enforcement action. Additionally, Paxos reached a $48.5 million settlement agreement with NYDFS in August 2025 concerning compliance issues related to Binance and BUSD.