Cross-currency transactions involve exchanging one type of currency for another. In the digital asset space, this extends to converting fiat currencies into cryptocurrencies, or exchanging one cryptocurrency for another, often facilitated by exchanges or decentralized protocols. These transactions frequently involve multiple steps, including liquidity provision, order matching, and settlement across different networks or ledgers. The efficiency and cost of these exchanges are critical for global trade and digital asset liquidity.
Context
Cross-currency transactions are fundamental to the global digital economy, enabling users to move value across various national and digital borders. Discussions often focus on the speed, cost, and regulatory compliance associated with these exchanges, particularly as new payment rails and stablecoin innovations emerge. Future advancements aim to reduce friction and increase the speed of these conversions, enhancing global financial connectivity.
The hybrid DLT model leverages Swift’s existing messaging standard with blockchain-native atomic settlement to eliminate counterparty risk in cross-currency flows.
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