The Paxos Settlement Service has gone live and now claims the bragging rights for the first live blockchain-based settlements of equities traded in the United States.
Paxos Settlement Service currently live after years of development
Paxos, which is a regulated cryptocurrency startup in New York, announced that its Settlement Service is now live, following years of development. The company made the announcement on Wednesday, stating that the new service will enable the simultaneous exchange of cash and a chosen number of securities listed in the US. The transactions would occur on Paxos’ own private version of Ethereum.
In October last year, Paxos Trust Company revealed the pilot of this service. They were working alongside Credit Suisse and Société Générale and received the green light from the U.S. SEC (U.S. Securities Exchange Commission) as a no-action letter. Following the announcement last year, Paxos has now revealed that the service is live.
Paxos Director of Securities Product, Melayna Ingram, stated that, “We spent years studying the groundwork to get the pilot running. Now it’s live and settling equities.” She added that they are referring to it as a pilot because the company has received the approval to operate with a limited number of participants, transaction volume, and securities.
The pilot phase will be active for 24 months. However, it will be limited to seven participants handling around 100,000 transactions per day. Ingram added that Société Générale is set to be integrated and to go live before the end of the current quarter.
This is a massive achievement for Paxos and the blockchain sector. Since the establishment of the Depository Trust & Clearing Corporation (DTCC), this latest development earmarks the first time that US equities are settled in an automated manner outside the system.
The global head of operations for Instinet Holdings, Luke Mauro, believes this is a significant achievement. He stated that this launch is remarkable in various ways. Instinet has been a substantial contributor to new technologies and efficiencies as well as alternatives. Thus, the company is pleased to be a part of this latest development, Mauro concluded.
Paxos seeking to become a registered clearing agency
Ingram added that over the past two decades, innovations in the US equities sector had been focused on trade execution and trading market venues. Meanwhile, the back office continues to operate in the same way it has for decades, making it out of touch with the current technology.
Based on this achievement, Paxos will now apply to the SEC this year to become a registered clearing agency. At the moment, only seven such licenses exist in the country. Paxos receiving the permit will make it the first company to provide the new blockchain service to all broker-dealers to settle U.S.-listed securities.
Paxos is delighted to be a part of this achievement. The head of digital asset markets at Credit Suisse, Emmanuel Aidoo, while discussing this latest development, stated that the Paxos Settlement Service is bringing blockchain technology that is compliant with regulations and allows them to take vital steps towards evolving and improving the market structure. The Paxos Settlement Service will also be key in unlocking capital that is currently tied up within the legacy settlement processes.