Tokenized FX: both currencies on a ledger
A foreign exchange trade has two payments, one in each currency, and each runs through its own payment system. If one side pays and the other does not, the payer loses the full amount. Tokenized FX settles both currencies as tokens on a ledger, payment versus payment (PvP), so either both legs settle or neither does. For a treasury or payments team the question is which form of money each leg uses. Dated events on the topic are in the calendar below.
The settlement risk that PvP removes
PvP is the payments counterpart of delivery versus payment. Circle cites the BIS Triennial Survey of April 2025 in its article Extending PvP access with onchain FX: 36 percent of daily FX settlement, 5.2 trillion US dollars, ran through PvP, and more than 1.4 trillion US dollars a day still settled gross and bilaterally, exposed to the full principal. CLS covers 18 currencies, and even among the pairs it covers, only 40 percent of settlement runs through PvP, according to the same article.
The exposure sits in the time between agreeing a trade and settling it, and Circle lists what it costs: limits, liquidity buffers and operational workarounds. The page on atomic settlement explains why the term itself came out of PvP research.
Tokenized bank money and central bank money
In June 2025, OSTTRA and Baton Systems connected Partior to their FX PvP service, so participants can settle FX trades in tokenized commercial bank money, around the clock, in US dollars, euros and Singapore dollars, as OSTTRA announced. One leg can also settle in fiat and the other in tokens. Partior's backers include J.P. Morgan, DBS, Standard Chartered and Deutsche Bank, and Baton's ledger had settled more than 13 trillion US dollars in FX by then. Fnality joined the same service with settlement in tokenized central bank funds.
Under the Monetary Authority of Singapore's Project Guardian, ISDA and Ant International tested FX settlement with tokenized bank liabilities with Standard Chartered, BNY and Bank of China (Hong Kong). The report on the pilot estimates that tokenized bank liabilities could lower the cost of cross-border payments by up to 12.5 percent, more than 50 billion US dollars a year by the end of the decade.
Stablecoins as the currency legs
The third model uses stablecoins. Circle describes onchain FX as stablecoins for both legs and a smart contract that releases both together or neither, with settlement at any hour; its StableFX service on the Arc network settles selected stablecoin pairs. For a euro leg in the EU, the regulated form is an e-money token under MiCA, such as the euro tokens compared on the EUR stablecoins page.
Each model gives the counterparties a different claim: on a bank for tokenized deposits, on a central bank for central bank funds, on an issuer for a stablecoin. The answer on tokenized deposits and stablecoins sets out that difference.
Upcoming events on payments and digital money in Germany
Finance Loop and tokenized FX trades
Payments in DLT-based markets and the forms of money that settle them were the subject of the payments panel at the Frankfurt Forum on Digital Assets & Applications, with speakers from the Deutsche Bundesbank, Deutsche Bank, Commerzbank, DZ Bank and AllUnity. Finance Loop supported the Bybit EU x Circle Roadshow in Frankfurt, with two panels on stablecoins, USDC and EURC.
Payments & Digital Money
Risk & Compliance
What is tokenized FX?
A foreign exchange trade in which both currencies move as tokens on a ledger and settle together, payment versus payment. The tokens can be tokenized bank money, tokenized central bank funds or stablecoins.
What is PvP settlement?
Payment versus payment links the two currency payments of an FX trade so that one settles only if the other does. It removes the principal risk of paying one currency without receiving the other.
How much FX settles without PvP?
According to the BIS Triennial Survey of April 2025, as cited by Circle, more than 1.4 trillion US dollars a day settled gross and bilaterally without PvP protection.
Can a euro leg settle as a token?
Yes. Partior supports euro in tokenized commercial bank money on the OSTTRA and Baton PvP service, and in the EU a euro stablecoin is an e-money token under MiCA.
Tokenized FX trades and Finance Loop
Finance Loop covers tokenized FX in its Payments & Digital Money track, next to stablecoin settlement, tokenized deposits and wholesale central bank money. Finance Loop brings people from bank treasuries, payment firms, FX desks and stablecoin issuers together at events in Frankfurt, Munich, Berlin and Hamburg.
Finance Loop is a professional network and has the goal of driving the adoption of emerging technologies in finance, such as AI, digital payments, cloud and blockchain solutions. Finance Loop helps its members build skills and personal networks in these fields: Investment & Digital Assets, Payments & Digital Money, Digital Infrastructure & Sovereignty, and Risk & Compliance.