State Street and Credit Suisse tested T+0 settlement on Paxos blockchain

A same-day settlement test

On May 17, 2022, Paxos disclosed that State Street and Credit Suisse had tested a same-day settlement workflow for U.S. shares using the Paxos Settlement Service, a private, permissioned blockchain system. State Street’s Digital and Alpha divisions adapted their workflow so the custodian could send settlement instructions to Paxos while continuing to produce the messages required by existing market infrastructure.

The important boundary is that this was a pilot and a simulation. Paxos said State Street simulated the settlement and custody of shares and related asset movements with Credit Suisse. The announcement did not identify the securities, trade value, number of transactions, test duration or measured cost savings. It therefore established that the institutions completed an integration exercise—not that the system had replaced conventional clearing at production scale.

Why T+0 mattered

Most U.S. broker-dealer securities transactions were operating on a T+2 standard in May 2022: settlement normally occurred two business days after the trade date. On February 9, 2022, the Securities and Exchange Commission had proposed shortening that standard to T+1 and requiring allocations, confirmations and affirmations as soon as technologically practicable on the trade date. The same proposal asked for comment on possible routes to T+0.

That policy backdrop made the Paxos test more than a generic blockchain demonstration. It addressed a live market-structure question: whether cash and securities could move together on the trade date while a large custodian remained connected to established operational systems.

Paxos described its service as supporting continuous netting and settlement instead of relying exclusively on batch processing. State Street’s participation tested whether a major custodian’s front-, middle- and back-office workflow could connect to that model. Credit Suisse supplied the other institutional side of the exercise.

The potential benefit was reduced time between execution and final settlement. In principle, a shorter window can reduce counterparty exposure and the capital tied up against unsettled trades. But those are expected mechanisms, not measurements from this pilot. The May 17 announcement supplied no independently audited comparison of margin, liquidity use, failure rates or operating cost.

A regulated but limited pathway

Paxos was not presenting an unrestricted alternative clearing system. SEC staff had issued time-limited no-action relief on October 28, 2019, for a feasibility study of the Paxos Settlement Service. That framework permitted a constrained test of simultaneous delivery-versus-payment settlement while specifying participant, volume, security and operational limits. Paxos began settling selected U.S.-listed equity trades for Credit Suisse and Instinet under that relief in February 2020.

The State Street pilot extended that record by adding a custody integration and testing T+0 workflow changes. It also showed how blockchain market infrastructure could be designed to interoperate with incumbent systems rather than requiring an immediate wholesale replacement.

Still, the May 17 evidence did not establish regulatory approval for broad commercial deployment. A staff no-action position is limited to the represented facts and is not the same as SEC registration of a clearing agency. Nor did a permissioned pilot demonstrate open-network decentralization, public verifiability or round-the-clock cash availability.

What the record supported on May 17

The narrow conclusion was consequential enough: three major financial-market participants had completed a concrete same-day securities-settlement test using blockchain infrastructure at the moment U.S. regulators were evaluating a shorter national settlement cycle.

The stronger claims remained unproven. The disclosed record did not show adoption beyond the pilot, production capacity across market-wide volumes, quantified savings, or elimination of reconciliation. Those were ambitions expressed by the participants. No later regulatory outcome or commercial expansion is used here to reinterpret what was knowable on May 17, 2022.