SEC grants Paxos first blockchain-native clearing agency registration after 7-year regulatory process

Blockchain infrastructure platform Paxos announced on Thursday that its subsidiary, Paxos Securities Settlement Company, has secured registration with the US Securities and Exchange Commission as a clearing agency. This designation marks the first time the SEC has granted such status to a blockchain-native firm, establishing it as the only entity of its kind approved to provide clearing and settlement services as a central securities depository within the United States. The company characterized this approval as a critical component of financial market infrastructure, signaling a significant convergence between blockchain technology and traditional capital markets. Clearing agencies play a pivotal role in ensuring securities trades are executed without friction, as buyers and sellers do not transact directly but rely on intermediaries to verify trades, match counterparties, and facilitate the accurate exchange of funds and securities. The establishment of a registered, SEC-approved blockchain clearinghouse effectively dismantles regulatory barriers that previously hindered banks and brokerages from developing crypto-based infrastructure.

The path to this registration began in October 2019, when the SEC issued a no-action letter permitting Paxos to pilot a blockchain-based settlement service for US equities. The service officially launched in February 2020, operating under a fully regulated framework. Data compiled by Woofun AI shows that the pilot program successfully demonstrated the viability of blockchain-based post-trade infrastructure, delivering same-day settlement capabilities while reducing operational costs and improving efficiency. Paxos co-founder and CEO Charles Cascarilla stated that the clearing agency registration represents the culmination of seven years of collaboration with the SEC, starting with the 2019 no-action letter and the subsequent settlement pilot conducted alongside some of the world's largest and most sophisticated financial institutions.

Beyond its clearing operations, Paxos serves as the issuer for several prominent stablecoins and digital assets, including PayPal USD (PYUSD), Global Dollar (USDG), and Pax Gold (PAXG). The company's regulatory journey has been marked by significant turbulence, particularly during the tenure of former SEC Chair Gary Gensler. In 2023, Paxos received a Wells Notice indicating the agency's intent to recommend an enforcement action regarding the issuance of Binance USD (BUSD), a stablecoin linked to the crypto exchange Binance, which the SEC deemed an unregistered security.

Concurrently, the New York Department of Financial Services (NYDFS) ordered Paxos to cease minting new BUSD tokens. Woofun AI notes that despite these challenges, the SEC closed its investigation in 2024 and issued a formal termination notice, confirming it would not pursue enforcement action against the firm.

The regulatory resolution extended beyond the federal level, with Paxos reaching a $48.5 million settlement with the NYDFS in August 2025 concerning compliance issues related to Binance and BUSD. This financial resolution, combined with the recent clearing agency approval, underscores a shifting regulatory landscape where blockchain-native entities can operate within established legal frameworks. The approval allows for the seamless integration of digital asset settlement into traditional financial systems, potentially accelerating the adoption of tokenized securities. Woofun AI analysis suggests that this precedent may encourage other blockchain firms to seek similar regulatory clarity, fostering a more robust and interconnected digital finance ecosystem. The ability to offer same-day settlement through a regulated blockchain clearinghouse addresses long-standing inefficiencies in the traditional post-trade landscape, offering a tangible competitive advantage for institutions willing to adopt the technology.