Paxos Wins SEC 'No-Action' Letter to Settle Equities on a Blockchain

Paxos is seeking to modernize the equities settlement process using a regulator-approved blockchain process.

The U.S. Securities and Exchange Commission granted Paxos Trust Company no-action relief Monday to settle equity securities trades on a blockchain platform for broker-dealers.

Paxos announced that Credit Suisse and Société Générale would be the first two companies to utilize the new Paxos Settlement Service, which would operate on a private and permissioned network.

Paxos has been working on the service for more than two years, said Melayna Ingram, Paxos' head of securities products and the product director for the service.

While Paxos has similarly been working with the SEC for some 18 months, the company only began working to secure the no-action letter itself about six months ago, she told CoinDesk.

The no-action relief will allow Paxos to operate its service within strict limitations so as to protect other market participants.

The company will begin by settling U.S.-listed equities, said Paxos CEO and co-founder Charles Cascarilla.

"We believe the process of securities settlement can be greatly optimized using blockchain, and with Paxos Settlement Service we will benefit from these efficiencies first hand. We see this as a significant and important milestone in our Digital Asset Markets strategy and foresee opportunities to leverage this product across numerous asset classes in the future."

Launching the Paxos Settlement Service allows the company to demonstrate how the company can combine digital assets with the securities space.

Monday's letter is the third granted by the SEC this year to a crypto company, and the first approving equities settlement.