The SEC registration turns Paxos into the first blockchain-native firm authorized to settle securities trades on a regulated ledger. Institutional adoption will be the real test.
Paxos has received approval from the U.S. Securities and Exchange Commission to operate a blockchain-based clearing agency. The company says it is the first blockchain-native firm authorized to provide central securities depository services in the country.
The approval was granted to Paxos Securities Settlement Company, a subsidiary. It allows the firm to offer clearing and settlement services for securities transactions under SEC oversight. Clearing agencies verify trades, match counterparties, and ensure cash and securities exchange correctly after a transaction. With this registration, Paxos gives traditional financial institutions a regulated path to use blockchain technology for post-trade operations.
The approval is a breakthrough for Paxos and a validation of blockchain settlement in regulated markets. It removes the uncertainty of operating a clearing service without explicit SEC authorization.
The real test is adoption. Paxos must now compete on cost, speed, and reliability against deeply entrenched clearing systems. The approval does not automatically drive banks to switch. The SEC’s willingness to register a blockchain-native firm sets a precedent that other crypto infrastructure companies can follow. That shifts the risk calculus: firms that waited for regulatory clarity now have a path to seek similar approvals, potentially increasing competition in post-trade services.
The SEC registration turns Paxos into a regulated intermediary for settlement, a role historically dominated by legacy infrastructure providers like the Depository Trust & Clearing Corporation (DTCC) . For banks and brokerages, using Paxos means transacting on a blockchain that operates within existing securities law, not a separate crypto sandbox.
Paxos said its clearing agency business can now provide blockchain-based settlement services within a fully regulated framework for U.S. securities markets. The company had already run a pilot program starting in February 2020, under a no-action letter from the SEC issued in October 2019. That pilot showed that blockchain infrastructure could support same-day settlement while lowering costs and improving operational efficiency. It involved some of the world’s largest financial institutions.
“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,” said Charles Cascarilla, co-founder and CEO of Paxos.
The timeline matters for understanding the risk of regulatory timing. From the 2019 no-action letter to the 2020 pilot to the formal registration, the process took the better part of a decade. Any firm seeking a similar registration should expect a multi-year engagement with the SEC, not a fast track.
The approval arrives after several years of regulatory scrutiny of Paxos. In 2023, the SEC issued a Wells Notice related to Binance USD (BUSD) , a stablecoin created in partnership with crypto exchange Binance. The regulator indicated it viewed BUSD as a potential unregistered security. During the same period, the New York Department of Financial Services (NYDFS) directed Paxos to stop minting new BUSD tokens.
A different outcome emerged the following year. The SEC formally closed its investigation and notified the company it would not pursue enforcement action. Then in August 2025, Paxos reached a $48.5 million settlement with the NYDFS over compliance matters connected to Binance and BUSD.
Key insight: The settlement and the SEC closure do not erase the history. Any institution evaluating Paxos’s clearing service will examine its compliance track record. The SEC registration shows the regulator is satisfied with current governance. The BUSD episode remains a data point for counterparty risk assessments.
Beyond its settlement business, Paxos operates several digital asset products, including PayPal USD (PYUSD) , Global Dollar (USDG) , and Pax Gold (PAXG) . These have been a separate revenue and growth area. The clearing agency approval adds a new business line that can be cross-sold to the same institutional clients.
Recent moves have also focused on infrastructure for institutional stablecoin adoption. In April 2026, Paxos Labs, a spin-off led by Cascarilla, raised $12 million from investors including Blockchain Capital, Robot Ventures, Maelstrom, and Uniswap Labs. According to information disclosed at the time, Paxos Labs is developing technology that allows large enterprises to launch branded stablecoins and integrate programmable payment systems into corporate operations.
The approval creates a clearer regulatory benchmark for other blockchain infrastructure firms. Circle, BitGo, and Anchorage Digital all offer custody and settlement services. None hold an SEC clearing agency registration. If Paxos wins institutional mandates, competitors will face pressure to seek similar approvals or risk losing market share in regulated post-trade services.
Execution risk: Running a clearing agency is operationally intensive. Paxos must maintain real-time settlement, manage counterparty defaults, and comply with SEC oversight on capital reserves and risk management. Any outage or settlement failure could draw regulatory intervention and erode trust.
Competition from incumbent systems: The DTCC and other traditional clearing houses are exploring their own blockchain projects. Paxos has a first-mover advantage in SEC registration, not in scale or liquidity.
Regulatory reversal risk: A change in SEC leadership could alter the agency’s approach to blockchain-based clearing. The current approval was granted under a specific administration. A future SEC could tighten rules or reinterpret existing ones, creating compliance costs for firms that built on this registration.
Stablecoin exposure: Paxos’s stablecoin operations remain subject to state and federal regulation. The NYDFS resolution in 2025 was expensive, and state-level scrutiny of stablecoin issuers is active. Any new enforcement action could spill over into confidence in the clearing business.
The immediate catalysts to watch are institutional announcements. If a major bank or broker-dealer announces it will use Paxos’s clearing service, that validates the model and accelerates adoption. If adoption remains limited to existing crypto-native clients, the approval’s market impact will be incremental.
A second decision point is SEC guidance on whether other firms can use similar structures. The agency could issue a public statement clarifying the standards it applied in approving Paxos, which would lower entry barriers for competitors. Alternatively, the SEC could keep the criteria opaque, preserving Paxos’s regulatory moat.
A third is the CLARITY Act, a piece of federal legislation that would provide a statutory framework for digital asset market structure. The bill has been endorsed by President Trump and is facing a Senate floor fight. If passed, it could codify the SEC’s authority over blockchain clearing and standardize the approval process, reducing regulatory risk for the entire sector.
The approval is a meaningful event for crypto infrastructure. It is not a guarantee of commercial success. The next 12 months will show whether Paxos can convert regulatory permission into institutional adoption.
For broader regulatory context on digital assets, see our coverage of Trump Endorses CLARITY Act Before Senate Floor Fight and Bessent Urges Congress to Pass Digital Asset Market Clarity Act.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.