SETTLEMENT AND PAYMENTS INFRASTRUCTURE

Delivery versus Payment (DvP)

A settlement mechanism that links the transfer of a security to the simultaneous transfer of payment, ensuring neither party bears principal risk. On-chain DvP can eliminate the T+1 or T+2 lag inherent in traditional systems.

EXAMPLE

SDX's on-chain DvP infrastructure settled Swiss franc bonds against digital cash in under ten seconds, versus the standard two-day cycle.

Relevant Roles and Functions

On-chain Role
Head of Digital Settlement Infrastructure
Function
Atomic Settlement Architecture
Blockchain-based Settlement Networks
Delivery-versus-payment Systems
Integration with Clearing Systems
Tokenized Asset Settlement
TradFi Equivalent
DTCC Connectivity
Payment Settlement Rails
Securities Clearing

Related Terms

Atomic Settlement

The simultaneous, conditional exchange of two assets in a single blockchain transaction—both legs complete or neither does—eliminating the gap between trade execution and final settlement that creates counterparty risk in traditional markets.

Example

Atomic settlement of tokenized Treasuries versus stablecoins achieves true delivery-versus-payment with no T+1 lag and no central counterparty required.

Settlement Finality

The point at which a transaction is irrevocably complete and the transferred assets are unconditionally owned by the recipient. On-chain systems can achieve near-instant finality, replacing the deferred finality of traditional clearinghouses.

Example

On-chain settlement finality eliminates the intraday credit exposures that central counterparties currently absorb on behalf of clearing members.

Counterparty Risk

The risk that the opposing party in a financial transaction defaults before settlement is complete. Atomic on-chain settlement targets the elimination of counterparty risk by making asset exchange simultaneous and conditional.

Example

Blockchain-based bilateral settlement reduces counterparty risk by making payment and delivery inseparable rather than relying on a clearing intermediary.

Tokenized Security

A traditional financial instrument—equity, bond, or fund unit—represented as a digital token on a blockchain, with ownership rights, transfer restrictions, and corporate actions managed by smart contract logic.

Example

Franklin Templeton's FOBXX tokenized money market fund distributes dividends automatically via smart contract, eliminating the fund administrator's manual allocation process.

Tokenized Deposit

A bank-issued, blockchain-based representation of a commercial bank deposit that moves on distributed ledger infrastructure while remaining a liability of the issuing bank—distinct from a stablecoin, which is typically issued by a non-bank entity.

Example

Citi's tokenized deposit pilot allows corporate clients to move cash between subsidiaries in real time on a permissioned ledger, with the same credit standing as a traditional deposit.