What are the potential risks and challenges associated with implementing t+2 settlement in the cryptocurrency ecosystem?

1 answers

• Nov 23, 2021 · 3 years ago
  One of the potential risks and challenges associated with implementing t+2 settlement in the cryptocurrency ecosystem is the increased exposure to price volatility. Cryptocurrencies are known for their price fluctuations, and with a longer settlement period, there is a higher chance of significant price changes occurring between the trade execution and settlement. This could lead to potential losses for traders and investors. Another challenge is the scalability of the settlement process. Cryptocurrency transactions are processed on blockchain networks, and increasing the settlement period to t+2 may put additional strain on the network's capacity. This could result in slower transaction confirmations and higher fees. Additionally, implementing t+2 settlement in the cryptocurrency ecosystem may require changes to existing regulatory frameworks. Cryptocurrencies operate in a decentralized and global environment, which makes it challenging to establish consistent settlement rules and regulations across different jurisdictions. This lack of regulatory clarity could hinder the widespread adoption of t+2 settlement in the cryptocurrency ecosystem. Overall, while t+2 settlement offers potential benefits such as reduced counterparty risk and improved liquidity, it also presents risks and challenges that need to be carefully considered and addressed.
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