The Securities and Exchange Commission has approved Paxos to clear and settle U.S. equities using blockchain technology, a move that puts the crypto infrastructure firm in direct competition with the Depository Trust & Clearing Corporation. Paxos, best known for issuing the Pax Dollar (USDP) and backing PayPal's stablecoin, will now be able to offer an alternative to the legacy clearing system that handles trillions in trades each day.
What the green light covers
The approval lets Paxos act as a clearing agency for stock trades, using its own permissioned blockchain to record and finalize transactions. That means Paxos can take over the post-trade processing that banks and brokers currently route through DTCC. The SEC's decision follows a years-long push by the firm to get regulated as a clearinghouse under federal securities law.
Why it's a big deal for settlement
The traditional clearing process can take two days — T+2, in industry jargon. Blockchain-based settlement can cut that to minutes or even seconds, which reduces counterparty risk and frees up capital for firms. Paxos has been running a similar service for crypto trades and precious metals, but stocks are a far bigger market. The total value of U.S. equities cleared daily is in the hundreds of billions.
The DTCC factor
DTCC has long been the default — and essentially the only — clearinghouse for American stocks. The SEC's approval of a competing blockchain-based clearinghouse is the first real challenge to that monopoly. Paxos will still need to sign up broker-dealers and banks to use its system, and regulators will be watching closely for any operational hiccups. The company hasn't announced a launch date yet.
What comes next
The approval is just the first step. Paxos now has to actually build out the network, onboard participants, and prove the system can handle the volume and resilience required for U.S. equity markets. The firm has said it will start with a limited set of stocks and expand. Whether the big Wall Street players will jump in — or stick with DTCC — is the open question that will define this experiment.
