Paxos has received a regulatory milestone that places it at the center of a shifting financial system. On May 28, 2026, the company announced that its subsidiary, Paxos Securities Settlement Company, gained registration as a clearing agency from the U.S. Securities and Exchange Commission.
The approval grants the firm authority under Section 17A of the Securities Exchange Act of 1934. It allows the company to operate as a central securities depository and to provide clearing and settlement services for eligible securities in the United States.
Paxos stated that this makes the subsidiary the only blockchain-native firm with such registration in the country. The designation places the company in a category long dominated by traditional financial infrastructure providers.
Years of regulatory groundwork lead to approval
The registration follows a prolonged process that began in 2019. The SEC issued a no-action letter that allowed Paxos to test blockchain-based settlement systems without enforcement risk.
The company launched a pilot program in February 2020. That program handled daily clearing and settlement of U.S. equities. Several large financial institutions took part in those operations, according to company statements and coverage of the pilot phase.
Charles Cascarilla, co-founder and chief executive of Paxos, described the path to approval in a statement.
"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," he said.
He added:
"As a registered clearing agency, PSSC is able to provide clearing and settlement services for transactions in eligible securities. Most importantly, it allows us to offer the most complete infrastructure for our partners to continue evolving with the market and blockchain technology.”
Pilot results shaped the current framework
The earlier pilot phase provided a test of blockchain infrastructure within a regulated environment. Paxos reported that the system supported same-day settlement for equity trades. Traditional settlement systems often require more time to complete transactions.
The pilot also showed reductions in operational complexity and cost, based on the company’s account. The ability to settle trades within the same day formed a central argument for broader adoption.
Clearing agencies play a critical role in financial markets. They ensure that trades complete correctly by matching buyers and sellers and confirming the transfer of assets and funds. Paxos now enters that role with a system built on blockchain technology rather than legacy infrastructure.
Expansion plans follow removal of experimental status
Full registration removes the limitations tied to the earlier no-action relief. Paxos can now scale its clearing and settlement services beyond pilot conditions.
The company plans to expand support for partners that handle digital assets and tokenized versions of traditional financial instruments. Paxos positions its platform as a bridge between blockchain systems and existing capital markets.
Its client list includes firms such as PayPal, Interactive Brokers, Mastercard, and Mercado Libre. These partnerships place Paxos within a broader network of financial and technology firms that explore digital asset services.
Regulatory tensions shaped the company’s path
The approval arrives after a period of regulatory friction. Paxos previously faced scrutiny tied to its issuance of Binance USD, a stablecoin associated with the Binance exchange.
In 2023, the SEC issued a Wells Notice that indicated potential enforcement action. Around the same period, the New York Department of Financial Services ordered Paxos to stop minting new units of that stablecoin.
The situation evolved over time. The SEC closed its investigation in 2024 and issued a formal termination notice. Paxos later reached a $48.5 million settlement with the New York regulator in August 2025 over compliance issues tied to Binance USD.
These earlier events formed part of what company executives describe as a complex regulatory path. The new clearing agency registration marks a shift toward formal recognition within the financial system.
Infrastructure ambitions extend beyond settlement
Paxos continues to build a broader platform that includes tokenization, custody, and trading services. The company issues digital assets such as PayPal USD, Global Dollar, and Pax Gold. It operates under regulatory frameworks in the United States, Europe, and Singapore.
The firm has raised more than $500 million from investors, according to its corporate information. It positions its infrastructure as a way to modernize financial systems that rely on older processes.
The clearing agency approval adds a key component to that strategy. It allows Paxos to integrate blockchain-based settlement with regulated market infrastructure in a direct way.
Convergence of blockchain and traditional finance
The SEC decision highlights an ongoing convergence between blockchain technology and traditional capital markets. Paxos describes the approval as a critical piece of financial market infrastructure.
The company’s earlier pilot demonstrated that blockchain systems can operate within regulatory frameworks while maintaining efficiency gains. The new status allows that model to move beyond testing conditions.
For financial institutions, a registered blockchain clearing agency removes a barrier to adoption. Banks and brokerages can interact with such infrastructure under existing regulatory rules.
The development places Paxos in a position to influence how post-trade processes evolve in the coming years. The company now operates within a system that demands both compliance and reliability at scale.
Kristian Koch
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