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SEC grants Paxos PSSC temporary clearing-agency registration

Paxos Securities Settlement Company, LLC won temporary SEC registration as a clearing agency under Section 17A — the first blockchain-native firm to clear and settle US securities.

by 4 min read
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The U.S. Securities and Exchange Commission granted Paxos Securities Settlement Company, LLC (PSSC) temporary registration as a clearing agency under Section 17A of the Securities Exchange Act of 1934. The order — SEC Release No. 34-105562, File No. 600-39 — was signed on May 28, 2026 and published in the Federal Register on May 29. PSSC becomes the first blockchain-native firm registered to provide clearance and settlement services for U.S. securities transactions, joining a category previously held by DTCC, NSCC, FICC and OCC.

What happened

PSSC is a Delaware LLC and a wholly-owned subsidiary of Kabompo Holdings, Ltd., the Paxos group's holding company. Its application has been on file with the SEC since August 2025 and went through an Order Instituting Proceedings in November 2025 plus an amendment in March 2026 before the Commission issued the temporary order. The grant is conditional and time-limited — common for clearing-agency registrations where regulators want operational evidence before converting to a permanent designation.

PSSC's stated business is to settle eligible securities through two channels:

  1. As a DTC participant for assets that remain in the legacy central securities depository; and
  2. Through the Paxos Settlement Service (PSS), a private, permissioned distributed-ledger system that records ownership of eligible securities and cash on the Paxos Ledger and supports delivery-versus-payment (DVP) settlement directly between counterparties.

Settlement is bilateral on PSS — two participants settle directly rather than netting through a central counterparty — which is the same architecture Paxos has run under no-action relief since 2020.

How we got here

Paxos has been running U.S.-equities settlement under SEC no-action relief since February 20, 2020, after the October 2019 No-Action Letter from the Division of Trading and Markets. The live pilot launched with Credit Suisse and Instinet as initial participants, with Société Générale added later. The temporary registration is the conversion of that arrangement from staff letter to Commission order — the regulatory category itself shifts from "we won't recommend enforcement" to "you are a registered clearing agency."

Numbers

- SEC Release:        No. 34-105562; File No. 600-39
- Federal Register:   2026-10808, published 2026-05-29
- Statute:            Section 17A, Securities Exchange Act of 1934
- Registration type:  Temporary (conditional, time-limited)
- Subsidiary:         Paxos Securities Settlement Company, LLC (PSSC)
- Parent:             Kabompo Holdings, Ltd. (Paxos group)
- Settlement system:  Paxos Settlement Service (PSS) on Paxos Ledger
- Pilot start:        2020-02-20 under no-action relief
- Application filed:  August 2025
- OIP issued:         November 2025
- Comparable agencies: DTC, NSCC, FICC (DTCC subsidiaries); OCC

What to watch

  1. The conditions list inside the order. Temporary registration orders carry operational, capital, and reporting conditions that have to be met before the Commission converts the registration to permanent. The specific conditions attached to PSSC will set the template that any next applicant copies.
  2. The DTC interoperability path. PSSC settling as a DTC participant in parallel with on-chain DVP via PSS is the bridge that lets institutions test the new rail without leaving the legacy depository. Whether DTC processes PSSC instructions on the same intraday windows as conventional broker-dealer participants is the first practical test.
  3. What "eligible securities" expands to. The initial scope is corporate equities and certain debt instruments. Any expansion to Treasuries, money-market fund shares, or tokenized private credit requires a separate amendment and another comment cycle.
  4. The next applicant. With an order on the books, the SEC's posture toward 17A applications from blockchain-native firms is now rule-based rather than letter-based. Application traffic from rival settlement platforms — DTCC's own ledger pilots included — will be the read on whether the Commission intends to certify multiple competing depositories.

Context

The clearing-agency registration is the most consequential SEC action under Section 17A in the blockchain era. It does not replace DTCC — DTCC remains the central depository for the overwhelming majority of U.S. equities — but it does authorize a parallel rail under the same statutory regime that governs the incumbent. That is materially different from a state trust charter or a special-purpose broker-dealer license, which were the prior ceilings for blockchain firms touching U.S. securities settlement.

It also fits a pattern Blockchain Posts has tracked through this spring of incumbent infrastructure plumbing onto blockchain rails under formal regulatory cover — see the DTCC Stellar tokenization announcement. The exemption-and-letter regime that defined 2019–2024 is increasingly being absorbed into rule-based registration.

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