Blockchain Not Bitcoin? Tech Behind BTC Fueling Trillion-Dollar Stock Market Plumbing Pilot
The technology behind Bitcoin is making its way to Wall Street.
Crypto startup Paxos says it has received the go-ahead from the US Securities and Exchange Commission to test a pilot program that will use blockchain technology to process stock trades.
The company hopes its product will make the process of settling equity trades faster and more cost-effective.
“This will be the first time in nearly 50 years that street-side listed U.S. equity trades will settle outside the legacy system. It will also be the first time blockchain technology is applied to transaction processing for public U.S. equity trades.
These are very important firsts that begin to lay the foundation for a more modern, innovative and open financial market infrastructure.”
According to a report from the Wall Street Journal, the Depository Trust & Clearing Corp. has “had a monopoly on the clearing and settling of equities trades in the U.S… Last year, it cleared an average of $1.3 trillion in stock trades each day.”
Paxos says it plans to start testing out its settlement platform immediately.
The New York-based company is working with Credit Suisse and Société Générale and says they will be the first early users.
“They are electing to build the future of settlement with Paxos in an extremely low-risk environment that has the potential to deliver big benefits: Paxos Settlement Service will lower settlement fees and give participants access to capital otherwise trapped in the legacy settlement system.”
In 2015, the New York State Department of Financial Services granted Paxos a limited-purpose trust charter, establishing it as the first company approved and regulated to offer crypto products and services.
Its regulatory approach has allowed it to operate as a gateway between traditional finance and new infrastructure based on digital assets.