Paxos Securities Settlement Company (PSSC), a subsidiary of Paxos, has become the first blockchain-native firm registered by the U.S. Securities and Exchange Commission (SEC) as a clearing agency under the Securities Exchange Act of 1934. The registration allows PSSC to provide clearing and settlement services for eligible securities transactions in the United States, moving its blockchain-based platform from pilot phase into full-scale, regulated market operations.
What the SEC approval allows
The new status lets PSSC operate as a live component of U.S. market infrastructure, integrating blockchain rails with existing settlement systems. PSSC can now:
- Clear and settle eligible U.S. securities trades using blockchain
- Offer same-day (T+0) settlement capabilities, subject to counterparty arrangements
- Scale services beyond limited pilots previously conducted under SEC no-action relief
Paxos CEO and co-founder Charles Cascarilla said the approval follows seven years of engagement with the SEC, during which the company refined its operational and compliance framework.
From pilot programs to live market use
Since 2020, PSSC has run clearing and settlement pilots for U.S. equities with major global financial institutions under an SEC no-action relief letter. These trials:
- Tested blockchain-based post-trade systems in a live but restricted environment
- Demonstrated capability for same-day settlement
- Indicated lower transaction and operational costs compared with traditional processes
With registration granted, the same infrastructure that supported these pilots can now be offered as a formal service within the U.S. regulatory perimeter.
Potential shift from T+1 to T+0
The move comes as U.S. markets have already transitioned to T+1 settlement, where trades typically settle one business day after execution. PSSC’s infrastructure is designed to support near-instant (T+0) settlement, which could:
- Free up capital and collateral that are currently tied up to cover settlement risk
- Reduce counterparty exposure during the time between trade and final settlement
- Change how firms manage intraday and overnight financing
Any large-scale shift toward T+0 would depend on adoption by broker-dealers, clearing members, and other market participants, as well as changes to operational and risk management processes.
Tackling settlement failures and system inefficiencies
Settlement failures remain a costly problem despite the move to shorter settlement cycles. Firebrand Research estimated that resolving settlement fails cost the equities market more than $96 billion in 2023, with that figure expected to grow.
Additional data cited from March 2026 shows:
- Settlement fail rates at the National Securities Clearing Corporation remained at 3.19% even after the shift to T+1
Given the scale of the existing infrastructure, even marginal efficiency gains are significant:
- The Depository Trust & Clearing Corporation (DTCC) processed securities transactions totaling $2.5 quadrillion in 2022
Blockchain-based, near-instant settlement is being positioned as one way to reduce fail rates and associated costs, though results will depend on actual market adoption and integration with legacy systems.
Who is Paxos and where blockchain fits
Paxos operates within existing U.S. regulatory frameworks and has relationships across payments and trading platforms, including:
- PayPal
- Interactive Brokers
- Mastercard
- Mercado Libre
The company issues several well-known digital assets:
- PayPal USD (PYUSD), a U.S. dollar stablecoin
- Pax Gold (PAXG), a gold-backed token
PSSC’s registration gives Paxos a direct foothold in regulated securities market plumbing, extending the firm’s activity beyond stablecoins and tokenized commodities into the core of post-trade equity settlement.
What traders and market participants may watch
In the near term, attention is likely to focus on:
- Which broker-dealers sign on first to use PSSC’s system
- Which specific securities are cleared and settled via the blockchain-based platform
- Any observable impact on:
- Overnight financing costs
- Collateral requirements
- Liquidity patterns in affected names
Market participants accustomed to instant finality in digital asset trading will be watching how closely traditional securities can now match that experience in a regulated environment.
Part of a broader real-world asset digitization trend
The approval aligns with a wider shift toward on-chain representation of traditional financial instruments:
- The digitization of real-world assets was valued at roughly $2 trillion in 2025
- Forecasts suggest this sector could exceed $3 trillion in 2026
- The on-chain value of tokenized U.S. government securities surpassed $13.4 billion by the first quarter of 2026
PSSC’s license from the SEC serves as a formal acknowledgment that distributed ledger technology is now being incorporated into core, regulated market infrastructure in the United States, rather than remaining at the margins of the financial system.
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