In an unexpected change from the conventional systems, New York-based Paxos has commenced settling stock trades utilizing blockchains. This is the first time that the SEC has allowed the settlement of US equities outside of the legacy systems.

New settlement service

Blockchain startup Paxos originated its settlement service recently, which enables the firm to process transactions on some stocks registered in the US. Recognized as Paxos Settlement Service, the platform will allow any two parties to settle securities trade undeviatingly and bilaterally with each other adopting a blockchain-based solution. 

The service will also process stocks among a limited number of broker-dealers. Early adopters comprise Instinet, Société Générale, and Credit Suisse.

The US Securities and Exchange Commission (SEC) granted no-action relief to Paxos, which has supported them to launch their settlement platform. This indicates that the regulator will not take any enforcement actions against the company for ejecting the product. This will help Paxos build a total contribution in the traditional securities sector, moving away from the crypto sector.

Landmark service for the blockchain industry

The settlement platform by Paxos marks the first vital interaction between the mainstream financial sector and blockchains. Though banks like JP Morgan are already operating their blockchain, this is the first time that the SEC has greenlighted a solution that works undeviatingly with various players in traditional finance.

According to Paxos, it will be capable of settling select large-cap and liquid stocks through its platforms that work on “a private and permissioned distributed ledger system that records changes in ownership of securities and cash resulting from the settlement of securities transactions between participants.”

Paxos is identified for issuing Paxos Standard Token (PAX), which is a US dollar-backed stablecoin. In current months, it has also launched a gold-back stablecoin. The company recommends that it will start developing the scope of the settlement platform to introduce the street side broker-dealers and other US-listed equities. It also intends to get the regulatory green light for running a clearing agency this year.

As Paxos is based in New York, it is a licensed financial services company that presents new avenues for giving tokenized securities and other crypto offerings that could be received into traditional finance and banking systems. 

The company’s co-founder and CEO, Charles Cascarilla, stated that receiving a no-action relief from the SEC was only the first step in their mission. He said that the firm is operating closely with Instinet and Credit Suisse to give cost advantages in the long run and to build a more refined live environment.