The U.S. Securities and Exchange Commission has approved Paxos Securities Settlement Company's registration as a clearinghouse. This marks the first time blockchain infrastructure has been explicitly integrated into the back-office operations of the U.S. securities market, making Paxos the only U.S. company currently authorized to operate a central securities depository business using a blockchain-native architecture.

Approved after seven years of effort

This progress builds on years of communication between Paxos and regulators. Public information shows that the process has been ongoing for approximately seven years, going through several phases including pilot programs and regulatory exemptions.

In 2019, Paxos received a letter from the U.S. SEC stating that it would not take enforcement action. In 2020, the company launched a pilot project for U.S. stock settlement scenarios, paving the way for its formal registration.

Access the securities settlement back-end

Clearinghouses and central securities depositories are crucial infrastructure for completing securities transactions and settlements. This approval signifies that blockchain technology is beginning to enter the more core back-office processes of the traditional US securities market, rather than being limited to cryptocurrency trading scenarios.

Run it as a temporary registration first.

Paxos will initially operate under a temporary registration framework. Meanwhile, U.S. regulators are still developing broader securities settlement arrangements, and subsequent rules will also affect the scope of expansion for this type of blockchain clearing model.