Settle Crypto Derivatives using wCBDC

Use Cases

About

Use Case Category	Use Case Scope
wCBDC	This use case involves using blockchain-based wholesale CBDC (wCBDC) as the settlement asset for regulated crypto derivative transactions. Crypto derivative products: bitcoin futures, bitcoin options, etc.

Description

Key Stakeholders:

Trading Parties, Central Bank

Story:

1. Trading parties agree to a crypto derivative transaction (futures, options etc).

2. Smart contracts are programmed to settle the trade via delivery versus payment.

3. Parties request issuance of wCBDC from the central bank for settlement amount.

4. At settlement, wCBDC is simultaneously transferred against receipt of the underlying crypto asset.

5. Settlement finality occurs atomically via the synchronized transfer.

6. Parties redeem any remaining wCBDC with the central bank after settlement.

Postconditions:

Crypto derivatives are settled securely with finality using wCBDC. Compliance, liquidity and risk management are improved in the process.

Example Solution Provider

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wCBDC as a regulated blockchain-based settlement asset improves risk management, compliance, liquidity and operational efficiency for crypto derivative lifecycle management.

• Settlement Asset - wCBDC provides a trusted settlement asset for crypto derivatives instead of relying on stablecoins. Reduces settlement risk.

• Atomic Delivery vs Payment - Smart contracts can encode logic to achieve DvP by releasing wCBDC upon receiving the underlying crypto asset. Removes custody risks.

• Improved Liquidity - Using central bank money as settlement asset opens participation to wider regulated entities compared to crypto native stablecoins.

• Reduced Counterparty Risk - PvP settlement compare to traditional deferred net settlement reduces counterparty default risks in crypto derivatives.

• Operational Resilience - Usage of wCBDC on resilient blockchain infrastructure provides continuous availability for settlement compared to legacy systems.

• Compliance - Rigorous AML/KYC procedures undertaken by central bank for issuance of wCBDC ensures full compliance.

• Fungibility - wCBDC provides a common financial asset for settlement compared to fragmentation of traditional payment rails.

• Programmability - Smart contracts allow automated settlement procedures to be programmed for efficiency.