Yesterday, asset tokenization firm Paxos announced that Credit Suisse and Societe Generale will be among the first to use its post-trade settlement service for equities. The blockchain-based delivery versus payment (DvP) solution enables the simultaneous settlement of cash for securities.
The U.S. Securities and Exchange Commission (SEC) issued a no action letter which means that Paxos can go ahead with the service and plans to initially target a small number of broker-dealers for settling certain equities.
New York regulated Paxos, best known as a stablecoin firm, claims to be releasing the first new equities settlement service in almost 50 years. With a private, permissioned blockchain, the process is streamlined whereby costs are reduced, settlement is nearly instant, and capital ‘trapped’ in the old system can be released.
Charles Cascarilla, CEO and Co-Founder of Paxos, explained: “The U.S. equities business continues to face unprecedented consolidation and economic pressures, requiring a comprehensive transformation of market structure. This is an important first step on our journey to reimagine the entire post-trade infrastructure, and one that creates immediate benefits for market participants.”
The only confirmed ‘early adopters’ of the technology so far are Societe Generale, a backer of Liquidshare settlement service, and Credit Suisse, also involved in the SIX digital asset exchange (SDX).
“At Credit Suisse, we are committed to exploring innovative applications of blockchain technology that can improve our business, as well as our clients’ experience,” said Emmanuel Aidoo, Head of Digital Asset Markets at Credit Suisse.
Aidoo added: “We believe the process of securities settlement can be greatly optimized using blockchain, and with Paxos Settlement Service we will benefit from these efficiencies first hand. We see this as a significant and important milestone in our Digital Asset Markets strategy and foresee opportunities to leverage this product across numerous asset classes in the future.”
Paxos, as a regulated trust firm for digital assets, is joining an emerging sector for blockchain. Last month, SDX launched a prototype of its platform, likewise using the technology for instant settlement. Credit Suisse is also a supporter of the Utility Settlement Coin (USC), or Fnality.
In the same week as SDX’s release, digital asset exchange Sygnum, a three way partnership with Deutsche Börse and Swisscom, onboarded its first clients. The exchange owner and Swisscom jointly developed Sygnum. That week further saw Boerse Stuttgart launch its own regulated asset platform.