SEC Send Paxos No-Action Letter In Regards To Blockchain-Based Equities

The Paxos Trust Company looks like it’s planning to streamline equities settlement by utilising a regulatory compliant blockchain-based process.

Paxos were subject to a letter of no-action relief from the infamous United States Securities and Exchange Commission (SEC) earlier this week on October 28th, in order to conduct equity securities trading on a blockchain-enabled platform designed specifically for broker-dealers.

Management revealed that Credit Suisse and Société Générale would be the first organisations to use the new Paxos settlement service, which will run on a permissioned distributed ledger technology (DLT)-based network.

As per Ethereum World News:

“The service will allow two different parties to bilaterally conduct securities trading with each other. Notably, the announcement marks the first regulated blockchain platform for settling these types of trades, which will be significantly more efficient than using legacy systems.”

But according to the head of securities products and the product director for the service at Paxos, Melayna Ingram, the developers at Paxos have been working hard on the newly introduced service for over two years.

Management has been working on integrating regulatory compliance rules with the Securities Commission over the past 18 months but the firm said that it only started looking at a no-action letter about six months ago.

There will be certain limitations of the service Paxos will provide through this no-action letter in order to protect consumers and several other market participants.

Ingram highlighted: 

“Paxos is using this no-action relief [as an] opportunity to launch this product [and] as a chance to both validate our understanding of the way that the product works and what the participants will need from us as well as the market appetite.”

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!