Paxos wins SEC approval to clear U.S. stocks on blockchain

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Paxos wins SEC approval to clear U.S. stocks on blockchain Paxos new license positions it alongside legacy giants such as DTCC and makes it a compelling, more efficient alternative for traditional finance giants than legacy competitors. What to know: - Paxos Securities Settlement Company, LLC has received full registration to provide clearing and settlement services by the U.S. SEC. - The approval clears a bottleneck for Paxos’ goals for institutional tokenization of real-world assets. - With blockchain as the clearing rail, PSSC can settle eligible securities on a same-day or nearly instantly, eliminating the traditional settlement window and freeing up locked capital for institutional participants. Paxos Securities Settlement Company, LLC (PSSC) has received full registration to provide clearing and settlement services by the U.S. Securities and Exchange Commission (SEC). Stablecoin issuer Paxos said the regulatory milestone makes its subsidiary the first blockchain firm authorized to operate as a central securities depository (CSD) for traditional equities in the U.S., positioning it alongside legacy post-trade frameworks like the Depository Trust & Clearing Corporation (DTCC). The approval clears a bottleneck for Paxos’ goals for institutional tokenization of real-world assets (RWAs), providing market participants with a pipeline to clear and settle digital asset trades involving traditional equities, per SEC’s response to Paxos on March 11. Paxos, which already holds licenses from the OCC in the U.S., Singapore's MAS, and Europe's FIN-FSA. said the central clearinghouse designation also allows it to bundle regulated stock clearing with its existing white-label infrastructure tools used by PayPal and Mastercard. The SEC first granted Paxos no-action relief in 2019, allowing the firm to develop a live settlement pilot in February 2020, which allowed it to integrate traditional finance (TradFi) giants such Bank of America, Credit Suisse and Societe Generale to clear daily U.S. equities transitions. Paxo’s newly registered status enables it to bypass legacy settlement infrastructure entirely. With blockchain as the clearing rail, PSSC can settle eligible securities on a same-day or nearly instantly, eliminating the traditional settlement window and freeing up locked capital for institutional participants. In traditional capital markets, stock trades execute in milliseconds, but final settlement, the actual exchange of cash for legal asset ownership, is processed through a centralized clearing house, typically, the DTCC. While the U.S. equity markets transitioned to a T+1 (one business day) standard settlement cycle in 2024, legacy financial plumbing continues to be restrained to structural delays, trapped collateral and counterparty risks. More For You The Governor of Minnesota signed into law a measure that, starting Aug. 1, makes it a crime to advertise and operate prediction market platforms across the state. What to know: - Prediction market platform Kalshi sued Minnesota in federal court to block a new state law that would criminalize operating, hosting or promoting such markets beginning Aug. 1. - Kalshi argues the law is unconstitutional, saying it intrudes on the CFTC’s exclusive federal authority under the Commodity Exchange Act and unlawfully restricts...

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