Off-exchange settlement refers to the completion of a trade transaction outside of a formal, regulated exchange venue. In traditional finance, this often involves direct bilateral agreements between parties or through clearinghouses that are not public exchanges. For digital assets, it can mean peer-to-peer transfers or settlements facilitated by specific protocols that do not rely on centralized order books. This method can offer greater flexibility and potentially lower fees but may carry different risk profiles compared to exchange-based settlements.
Context
Off-exchange settlement discussions often emerge in the context of regulatory arbitrage, the efficiency of decentralized finance (DeFi) protocols, or the desire for greater transaction privacy. News may report on regulatory bodies examining off-exchange trading practices or on new DeFi protocols designed to facilitate direct peer-to-peer settlement. The distinction between on-exchange and off-exchange activity is critical for understanding market structure and regulatory oversight in the digital asset space.
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