Settlement is a core component of any trade, but in crypto, it operates differently from traditional finance. Whether you’re a bank focused on secure custody or a broker seeking competitive execution speeds, aligning your business model with the right settlement infrastructure is key to success. Wyden’s institutional-grade, automated settlement platform is purpose-built to support banks and brokers as they grow and scale their digital asset services.
Traditional financial settlement systems are highly regulated, yet relatively slow and depend on multiple intermediaries. In contrast, crypto networks offer near instantaneous, 24/7 settlement capabilities with far fewer intermediaries. These variations present both opportunities and risks for institutions seeking to explore this emerging asset class.
Settlement in digital assets vs. traditional finance
Settlement in digital assets differs from traditional finance in several ways.
Speed and finality
Traditional settlement often works on T+1 or T+2 cycles. Crypto assets can settle in real time or near-instantly, often with finality guaranteed by the blockchain consensus mechanism. However, finality times can vary by blockchain protocol and may require multiple confirmations before settlement is considered complete. For institutions, this reduces counterparty and settlement risk but demands more operational agility.
Custody model
In traditional finance, assets are held by centralized custodians and clearinghouses. In crypto, direct custody is on-chain, managed through wallets using private keys. Institutions, therefore, have options ranging from self-custody — where they control private keys and assume operational and security risks — to regulated third-party custodians who offer insured, compliant solutions.
The industry’s maturing state means there is plenty of choice among custodians, many of which also offer settlement options and integrations. Examples include Copper’s Clearloop or the Fireblocks Network, which facilitate settlement between participating network members.
Intermediaries
Financial settlements typically rely on layers of intermediaries, such as brokers, custodians, or clearing agents. Crypto can reduce or remove many intermediaries, enabling peer-to-peer transfers or programmable settlement via smart contracts; however, in institutional settings, intermediaries such as custodians, brokers, and liquidity providers often remain necessary due to regulatory and operational considerations. Institutions must define their operational role in this leaner architecture.
Operating hours
Markets in traditional finance still tend to follow business hours and holidays. Crypto is 24/7/365. Institutions must be able to manage risks, liquidity, and operations continuously, including weekends and holidays. Therefore, automated solutions are a necessity.
Reconciliation and transparency
Traditional settlement involves periodic reconciliation across siloed systems. Crypto offers real-time, on-chain records that can dramatically reduce reconciliation effort and error. This requires new back-office systems but can lead to significant efficiency gains.
Delivery vs. payment (DvP)
DvP is often achieved in TradFi via clearing systems and settlement windows. In crypto, atomic settlement – where both legs of a trade are executed simultaneously – is achievable with smart contracts or trusted custodial infrastructure. This can lower counterparty risk and speed up transaction cycles.
Counterparty risk management
Digital asset settlement platforms often allow funds to remain in custody during trade execution, reducing the need to pre-fund exchanges and minimizing exposure. This is a critical consideration for institutional risk frameworks.
Features of digital asset settlement solutions
Modern institutional crypto settlement networks provide infrastructure that mimics and improves upon traditional processes, with some common and important features.
Exchange connectivity
Settlement solutions should integrate with multiple exchanges, enabling cross-venue settlement along with liquidity aggregation and optimization.
Custodial connectivity
Connectivity with custody providers helps ensure assets remain secure throughout the settlement process. This may include support for MPC wallets, hardware security modules (HSMs), or fully regulated custodians.
Automation
Automating the settlement workflow enhances efficiency and enables 24/7 trade operations, while also reducing the risk of human errors and settlement failures.
Off-exchange settlement
Institutions can trade on exchanges without needing to move assets out of custody, reducing operational risk and improving capital efficiency.
Net settlements
A financial institution can choose to net the settlement with their trading counterparties. In doing so, they can reduce operational risks and transaction costs, combining net settlement amounts in single sending and receiving legs in customized settlement cycles.
Fiat and stablecoin support
Fiat integration (via stablecoins or banking partners) is vital for trade settlement and cash leg fulfillment, especially for institutions operating in multiple currencies. Institutions should note that regulatory scrutiny around stablecoins is evolving, which may impact their adoption and use.
Risk controls and compliance
Institutions need support for transaction screening, whitelisting, dual authorization, audit logs, and more to meet regulatory requirements.
Interoperability and APIs
Settlement networks must integrate core banking and OEMS functionality into existing systems via robust APIs and standards like ISO 20022.
Choosing a settlement solution
Banks entering the digital asset space typically prioritize:
- Regulated custody with full compliance support.
- Fiat integration through SWIFT/SEPA.
- Risk and access controls comparable to traditional finance.
- Client account structures that support B2B2C models.
- Scheduled or real-time settlement, depending on internal infrastructure.
These institutions benefit from platforms that combine crypto-native technology with regulatory robustness.
Brokers tend to prioritize:
- Fast, low-latency settlement for rapid execution.
- Broad exchange connectivity for best execution.
- Real-time collateral tracking.
- Flexible custody models to serve varied client needs.
- APIs and automation support.
They lean toward networks that offer performance, integration flexibility, and operational control.
As institutions enter the crypto space, understanding how settlement differs from traditional systems, as well as what that means for custody, compliance, and client service, is critical for banks and brokers to select the optimal infrastructure to support their chosen business model.
Wyden Infinity for settlement
Wyden Infinity is a state-of-the-art system for managing the end-to-end trade life cycle, including seamless post-trade settlement capabilities fit for both banks and brokers. The Wyden Infinity Settlement Engine automates asset movements across all connected trading accounts, eliminating manual processes, reducing operational risk, and ensuring full traceability for audit and compliance.
The Settlement Engine initiates and manages automated settlement instructions with trading counterparties, including exchanges, trading venues, custodians, and other service providers, ensuring timely and reliable movement of assets post-trade. It also supports real-time asset transfers between internal accounts, including segregated client wallets, omnibus accounts, and internal treasury and trading books.
Wyden Infinity supports intra-day, partial, and end-of-day settlement cycles, with custom scheduling to align with operational workflows. The netting feature optimizes settlement efficiency with net settlement calculations per asset and counterparty, helping to reduce transaction volumes and associated transfer costs.
End-to-end automation of the post-trade workflow ensures minimal risk of settlement failure, while ensuring full auditability and compliance readiness at all times.
Connectivity is at the core of Wyden’s architecture, setting our solution apart from a market comprising custodian-led settlement solutions. Wyden Infinity meets the requirements banks and brokers demand from a robust trading and settlement solution while being agnostic to other platforms, such as custodians or liquidity providers. Wyden integrates with a wide array of trading venues, brokers, and OTC markets. Therefore, banks and brokers are free to adopt a modular custody, trading, and settlement solution that fits their needs rather than being tied to a single-provider network.
Offering enhanced speed, efficiency, accuracy, and control, the Wyden Infinity Settlement Engine covers all institutional post-trade needs. To learn more about the benefits or see Wyden Infinity handling settlement in action, contact us for a full demo.