Paxos has made history by becoming the first blockchain-native firm to receive registration as a clearing agency from the U.S. Securities and Exchange Commission (SEC). This landmark approval unfolds new potential for blockchain technology in the realm of securities trading, signaling a progressive shift in the financial industry's approach to digital assets.
On May 29, 2026, Paxos announced that its subsidiary, Paxos Securities Settlement Company, has officially been recognized as the only clearing agency based on blockchain infrastructure to operate within the U.S. This certification is seen as a crucial component of the modern financial market infrastructure, particularly as interest in cryptocurrencies surges among Wall Street firms.
In traditional securities trading, clearing agencies play an indispensable role by ensuring trades are executed efficiently. They facilitate the verification of transactions between buyers and sellers, along with the actual transfer of money and securities. The SEC's endorsement of a blockchain-based clearinghouse addresses obstacles that have previously hindered banks and brokerages from establishing dedicated cryptocurrency infrastructures.
Paxos’ journey to this pivotal moment began back in October 2019, when the SEC issued a no-action letter permitting the company to pilot its blockchain-based settlement service for U.S. equities. Following a successful rollout in February 2020, the pilot program demonstrated that blockchain technology could enable same-day settlements, reduce transaction costs, and enhance operational efficiencies within a fully regulated environment.
“Achieving our clearing agency registration is the culmination of seven years of collaborative efforts with the SEC, starting with our initial no-action letter in 2019. Our settlement pilot involved some of the most esteemed financial institutions globally,” remarked Paxos co-founder and CEO Charles Cascarilla.
Paxos is also known for issuing various stablecoins and digital assets, including PayPal USD (PYUSD), Global Dollar (USDG), and Pax Gold (PAXG). However, the company’s path has not been without hurdles. Under the previous SEC chair Gary Gensler's administration, Paxos faced scrutiny and received a Wells Notice in 2023, with the commission suggesting potential enforcement actions regarding its Binance USD (BUSD) stablecoin, which was deemed by the SEC as an unregistered security.
Following these challenges, the New York Department of Financial Services (NYDFS) instructed Paxos to halt the minting of new BUSD units. Eventually, in 2024, the SEC concluded its investigation, issuing a formal termination notice and indicating that no enforcement action would be pursued. In August 2025, Paxos settled compliance issues concerning BUSD with the NYDFS for $48.5 million.
As the financial landscape evolves, Paxos’ innovative approach signifies a blending of blockchain technology with traditional markets, potentially paving the way for more companies to explore how digital assets can coexist within established financial systems.
Source: Cointelegraph