Paxos Launches Blockchain Settlement Platform Following No-Action Relief From SEC
Paxos Trust Company announced on Oct. 28 that it will go ahead with the launch of its blockchain-enabled Paxos Settlement Service and will begin processing transactions for certain listed U.S. equity securities after receiving ‘No-Action relief’ from the U.S. Securities and Exchange Commission (SEC).
The letter from the SEC clearly stated that, “the Staff would not recommend enforcement action to the Commission against Paxos” should they operate within the parameters they set out in their request for registration. While essentially giving Paxos the green light, the SEC’s letter also clearly stipulated that at this stage, “No more than seven (7) participants will be eligible to use the Paxos Settlement Service for clearance and settlement and the participants will be required to satisfy the criteria for participation.”
European banks Credit Suisse and Société Générale will be among the first to use the Paxos Settlement Service and will also be among the first to settle U.S. equities outside of the legacy infrastructure for the first time in 50 years. The innovative blockchain product will remove intermediaries and allow two parties to bilaterally settle securities trades directly with each other which will significantly reduce transaction fees and give permissioned-users access to capital that would historically be trapped in the legacy systems.
Taking the First Step
According to Charles Cascarilla, CEO and Co-Founder, Paxos, the U.S. equities business is facing unprecedented consolidation and economic pressure which requires comprehensive changes to the legacy structures. He sees the Paxos Settlement Service as an important first step in reimagining the post-trade structure.
He concluded the press release stating, Cascarilla added, "We look forward to working with our early adopter partners to further develop the ecosystem. Together, we'll create financial benefits and achieve operational efficiencies with blockchain technology that will facilitate an open financial system. We're starting with U.S. listed equities, but this technology can be scale to many asset classes across geographies and for all types of clients."
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