According to CEO Charles Cascarilla, Paxos strives to get a clearing firm license as it already settles equity trades so let’s read more in our latest crypto news.
Stablecoin issuer and exchange Paxos strives to get a new license to become a clearing firm with the US SEC. Clearing firms are intermediaries in the US Securities markets facilitating payments and the transfers of the securities for exchanges. If Paxos gets this license, it will become one of the few clearing firms in the US that will join the Depository Trust Company, Options Clearing Corporation, and others. Charles Cascarilla said that the company already settles US Equities trades and it is hoping to become a full clearing firm:
“We’re going to be submitting our clearing agency application hopefully in very short order. We are really committed to being infrastructure in a similar way.”
There’s no timeline for when the exchange will submit the application and after it does the SEC will publish it for public comment. Cascarilla also raised the idea that these types of systems could be more efficient than the current infrastructure of the market:
“The GameStop issue really highlighted how blockchain infrastructure can help solve a lot of the problems in our markets.”
A few brokerages offering GameStop trading were squeezed into suspending the stocks due to the market volatility that was caused by rising clearing firm costs that were attributed to the current two-day lag in a time dubbed T+2. Under the current system, the trades are now settled by the DTCC after they are conducted. The blockchain network will let companies know exactly who owns what referring to the T+0 or same-day settlement but a blockchain could not be the right tool that will get the job done. Cascarilla said:
“I don’t know if a public blockchain can handle the level of infrastructure that is needed in the public U.S. equity markets today. I think that will be the case in the future but for instance to be able to handle 500 million transactions … that is something that you can’t put through, for instance, the Ethereum blockchain.”
The House Financial Services Committee hearing on GameStop trading highlighted how Wall Street's "plumbing" is a problem for the industry. Paxos CEO Cascarilla shares in this @Forbes story how Paxos is working to change the system with blockchain. https://t.co/OhkUnBdFJZ
— Paxos (@PaxosGlobal) February 22, 2021
Paxos applied to also become a nationally chartered bank via the Office of the Comptroller of the Currency and this application is still under review.
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