Digital DvP, or Digital Delivery versus Payment, represents a synchronized exchange where digital assets are transferred only upon the simultaneous receipt of digital payment. This mechanism ensures that both parties fulfill their obligations concurrently, mitigating settlement risk. It operates within a digital environment, often leveraging blockchain or distributed ledger technology for atomic settlement. This process removes counterparty exposure by guaranteeing the delivery of one asset contingent on the delivery of another.
Context
Digital DvP is a key development in modern financial market infrastructure, frequently discussed in news concerning digital securities and central bank digital currencies. Its implementation aims to enhance market efficiency and reduce systemic risk in the settlement of digital assets. Regulatory discussions often address the legal and operational frameworks necessary to support widespread adoption of Digital DvP models.
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