Paxos plans to carry out equity settlement by using a regulatory compliant blockchain-based process. The decision comes after the U.S. Securities and Exchange Commission (SEC) granted it a “No-Action Relief.”
According to reports, the No-Action relief from the SEC means that the U.S. agencies can’t take any enforcement action against the company for the service or product it provides. Therefore, allowing the introduction of Paxos Settlement Service. Accordingly, the blockchain settlement platform commences processing transactions for a limited number of broker-dealers. Also, for certain listed U.S. equity securities.
More info on Paxos Settlement Service
Paxos Settlement Service is a private blockchain solution. It’s created to ensure that two parties can bilaterally settle securities trades directly with each other.
Importantly, the platform becomes the first live application of the blockchain technology for U.S. equities. Thus, enabling settlement of securities trades more cost-effectively and securely than the legacy system. It also allows a simultaneous exchange of cash and securities to settle trades and it’s compatible with the current processes, simplifying integration.
The platform’s primary advantage is that it allows clients to secure fee reduction. And gain access to capital stuck in the legacy settlement system.
Chief Executive Officer and Co-Founder of Paxos, Charles Cascarilla commented on the development. “The U.S. equities business continues to face unprecedented consolidation and economic pressures. Therefore, requiring a comprehensive transformation of market structure. This first step is important in our journey to reimagine the entire post-trade infrastructure. It also creates immediate benefits for market participants,” he said.
Following the announcement about the launch of the settlement service, it’s been revealed that some entities are already using Paxos Settlement Service. For instance, Credit Suisse and Société Générale. Also, settling U.S. equities outside the legacy infrastructure for the first time in about 50 years.
Head of Digital Asset Markets of Credit Suisse, Emmanuel Aidoo spoke about the project. “We believe the process of securities settlement can be greatly optimized using blockchain. Thus, with Paxos Settlement Service we’ll benefit from these efficiencies first hand. We see this as a significant and important milestone in our Digital Asset Markets strategy. Also, we foresee opportunities to leverage this product across numerous asset classes in the future,” he said.
The COO of Americas Global Markets at Société Générale, Jeffrey Rosen said: “By implementing Paxos Settlement Service as an early adopter, we’ll be able to tailor the system to our needs. Also, we’ll be able to introduce a technology that positively impacts our cost structure in both the immediate and long-term. The service carries the ability to deliver meaningful benefits to our operations and business. Hence, we’re excited to be on board.”
To remind, cryptocurrency wallet, Blockchain.com announced a partnership with Paxos (PAX) to offer storage to its users.