- The need for banks and brokerages for building crypto-based infrastructure is alleviated by a registered blockchain clearinghouse.
- Blockchain-based post-trade infrastructure may bring about same-day settlement while simultaneously lowering costs and increasing operating efficiency.
The first “blockchain-native” company to get registration as a clearing agency from the US SEC is Paxos, a blockchain infrastructure platform and stablecoin issuer. On Thursday, Paxos said that its subsidiary, Paxos Securities Settlement Company, has been authorized by the SEC to serve as a central securities depository in the United States, making it “the only blockchain-native firm” in this capacity.
Charles Cascarilla, co-founder and CEO of Paxos stated:
“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.”
The business went on to say that this clearance is a “critical piece of financial market infrastructure” because of the ongoing convergence of blockchain technology with conventional capital markets.
Securities Settlement with Blockchain-based Market Infrastructure
Clearing agencies guarantee that securities trades are carried out in a tidy manner. Clearing and settlement providers are essential to the stock trading process because they authenticate trades, pair buyers and sellers, and guarantee a smooth transfer of funds and securities.
The need for banks and brokerages for building crypto-based infrastructure is alleviated by a registered blockchain clearinghouse that has been approved by the SEC. After receiving a no-action letter from the SEC in October 2019, Paxos was able to begin testing a settlement service for US stocks that relied on blockchain technology. The service was officially launched in February 2020.
The pilot, according to Paxos, proved that, within a properly regulated environment, blockchain-based post-trade infrastructure may bring about same-day settlement while simultaneously lowering costs and increasing operating efficiency. Paxos is a digital asset and stablecoin issuer. Some of its products include Pax Gold (PAXG), Global Dollar (USDG), and PayPal USD (PYUSD).
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