Paxos Becomes First Blockchain-Native SEC-Approved Clearing Agency

• The need for banks and brokerages for building crypto-based infrastructure is alleviated by a registered blockchain clearinghouse.
• Blockchain-based post-trade infrastructure may bring about same-day settlement while simultaneously lowering costs and increasing operating efficiency.

The first “blockchain-native” company to get registration as a clearing agency from the US SEC is Paxos, a blockchain infrastructure platform and stablecoin issuer. On Thursday, Paxos said that its subsidiary, Paxos Securities Settlement Company, has been authorized by the SEC to serve as a central securities depository in the United States, making it “the only blockchain-native firm” in this capacity.

Charles Cascarilla, co-founder and CEO of Paxos stated:

The business went on to say that this clearance is a “critical piece of financial market infrastructure” because of the ongoing convergence of blockchain technology with conventional capital markets.

Securities Settlement with Blockchain-based Market Infrastructure

Clearing agencies guarantee that securities trades are carried out in a tidy manner. Clearing and settlement providers are essential to the stock trading process because they authenticate trades, pair buyers and sellers, and guarantee a smooth transfer of funds and securities.

The need for banks and brokerages for building crypto-based infrastructure is alleviated by a registered blockchain clearinghouse that has been approved by the SEC. After receiving a no-action letter from the SEC in October 2019, Paxos was able to begin testing a settlement service for US stocks that relied on blockchain technology. The service was officially launched in February 2020.

The pilot, according to Paxos, proved that, within a properly regulated environment, blockchain-based post-trade infrastructure may bring about same-day settlement while simultaneously lowering costs and increasing operating efficiency. Paxos is a digital asset and stablecoin issuer. Some of its products include Pax Gold (PAXG), Global Dollar (USDG), and PayPal USD (PYUSD).

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