Settlement risk reduction refers to strategies and mechanisms implemented to minimize the potential for loss occurring during the finalization of a financial transaction. In digital asset markets, this involves using technologies like atomic swaps or immediate on-chain finality to ensure both sides of a trade are completed simultaneously. It mitigates counterparty default exposure.
Context
News frequently covers settlement risk reduction as a critical benefit of blockchain technology in traditional finance and digital asset markets. Innovations in payment systems and decentralized exchanges prioritize mechanisms that guarantee transaction finality. These advancements are key for increasing confidence and efficiency in high-value transfers.
The Kinexys rebrand and FX integration establish a 24/7, on-chain settlement rail, drastically reducing counterparty risk and enhancing global capital efficiency.
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