A notable paradox has emerged where traditionally cautious bodies, such as the central banks of Australia, Singapore, and Great Britain, and the U.S. government, are actively embracing distributed ledger technology (DLT)-based innovation, appearing less risk-averse than the financial firms who are being held back by “collective uncertainty”. The critical question facing the industry is not what the future of FX settlement looks like, but how to get there without costly and high-risk technology overhauls. The solution is integration, not replacement. This article discusses how the latest regulatory developments around the globe accelerate the post-trade innovation roadmap and how to lower the barriers to adoption while ensuring operational continuity.
As I read the news that the U.S. government is set to publish economic data on blockchain, I wondered if we have arrived at a turning point in financial markets: Could this be the end of uncertainty about what the next iteration of Wall Street will look like?
It’s a matter I’ve given lots of thought to this summer, especially after a number of officials and studies highlighted the scale of the problem that comes with continuing to use archaic technology – just FX settlement, the area I work in, is a $50bn annual problem, driven by a preference for fixing the old rather than switching to a new way of operating – one that’s already proven and available.
The U.S. government embracing distributed-ledger technology could finally shift the inertia when it comes to settling FX trades and spur a move towards adopting a more efficient, cheaper and faster solution. Now, the market just has to have conviction and switch it on at scale.
The $50bn legacy problem
Issues around FX settlement are clear from the study published by ISDA and Ant International, as part of a working group for the Monetary Authority of Singapore’s Project Guardian. The tension between the once-daily FX settlement processes and the increasingly 24/7 nature of markets has also been highlighted in a speech by Sasha Mills, executive director for financial market infrastructure at the Bank of England.
Delays, costly inefficiencies and overly-complex, patched up systems persist despite better alternatives being available.
Mills attributed this inertia to collective uncertainty about where markets are going from a tech perspective. The problem for financial markets is that harmonising post-trade processes is hard and new solutions only scale if the majority of participants adopt them.
This is why change has been so slow to materialise, with the BoE’s Mills noting that the central bank’s survey about the future of post-trade services revealed that 75% of IT spend went on patching up “potholes” in existing infrastructure rather than building for a future that is already here.
This diagnosis of the industry’s inertia is precisely why collaboration is now the most critical path forward.
Join U.S. GENIUS on the journey to CLARITY – from retail ripple to wholesale revolution
July 2025 marked a major milestone for financial markets participants and infrastructure providers. By approving the GENIUS Act, the U.S. authorities provided banks with a direct regulatory path to issue stablecoins. This has also prompted major retail firms to explore issuing their own corporate coins, though the Act creates a more restrictive, high-bar approval process for non-financial companies seeking to do the same.
This paradigm shift in policy will have far reaching ramifications for retail consumers, intermediaries and infrastructure providers in the financial markets. It paves the way for mass adoption of new infrastructure which will drive real benefits for consumers and removes the constraints of legacy payments infrastructure. A GENIUS secondary benefit is that it will create new demand for USD and US Treasuries – as StableCoin issuers must warehouse ‘High Quality Liquid Assets’ to back their tokens. While the trend of ‘de-dollarisation’ is a frequent topic of debate, particularly regarding central bank reserves, this move is set to act as a powerful counterweight, reinforcing the dollar’s central role in the emerging digital asset ecosystem.
The CLARITY Act, largely focused on Crypto, digital assets and tokenised market microstructures, still needs to be approved by the Senate Banking Committee. Once approved, I can see it providing the impetus for technology transformation in financial markets infrastructure.
Some firms will argue that the impact is largely on their retail banking customers, so why make changes to the core wholesale markets post-trade infrastructure? Others will take this opportunity to build for the future. They will mobilise and look to uplift their legacy infrastructure, workflows, and operating models, while creating new StableCoin, tokenised assets and services to reap the benefits of programmable money – enabling efficient 24/7 mobility of cash and collateral for their customers.
Collaboration is central to a faster final settlement future
A key risk in financial innovation is the emergence of so-called ‘walled gardens’ that fragment the systems, trap liquidity, and undermine efficiency. This is why collaboration and interoperability is now the most critical path forward. While the case for new technology is clear, a “rip out and replace” approach presents significant operational risk and cost for firms heavily invested in legacy infrastructure. OSTTRA’s strategy directly addresses this challenge by focusing on integration, not replacement. We act as an essential bridge, using OSTTRA’s global established networks to connect clients to new, DLT-enabled workflows. This means firms can plug into the network to access services from innovators like Baton Systems, Fnality and Partior, effectively layering their new capabilities on top of existing infrastructure.
By enabling the industry to perform both legacy and new processes simultaneously through established connectivity, we lower the barrier to adoption and ensure the market can evolve as a cohesive, mixed ecosystem rather than being fractured by technological divides. Specifically, by integrating Fnality’s system with OSTTRA’s on-demand FX PvP settlement orchestration service, we are creating a network that moves FX settlement from a slow, sequential, and uncertain process into an era of digital collaboration where settlement is simultaneous or near-instant and not tied to commercial bank money.
Similarly, by connecting our FX settlement services with Partior’s unified multi-currency network, we are actively building bridges between fiat and tokenised commercial bank money to give clients true interoperability and choice, rather than trapping them in the proverbial walled garden.
“By enabling the industry to perform both legacy and new processes simultaneously through established connectivity, we lower the barrier to adoption and ensure the market can evolve as a cohesive, mixed ecosystem rather than being fractured by technological divides.”
– Basu Choudhury, OSTTRA
Conviction is building
For market participants who are still on the fence about what the future of FX settlement looks like, I’ll point to central banks around the world as they increasingly work towards a market structure where DLT plays an integral role.
As a case in point, Project Meridian FX (MFX) is a joint initiative between the Bank for International Settlements (BIS) and Bank of England, Bank of France, Bank of Italy, Deutsche Bundesbank and the European Central Bank. It explores how operators of wholesale payment infrastructures can enable interoperability with new technologies, such as DLT, with a focus on foreign exchange (FX) transactions.
Project MFX builds on the concept of synchronisation to demonstrate its technical feasibility in a multicurrency FX transaction. Through the experiments conducted during the project, a synchronisation operator enabled atomically-settled FX transactions between different RTGS systems in various jurisdictions, as well as between an RTGS system and a DLT platform.
In Australia, the RBA announced the next phase of Project Acacia in July, selecting 24 use cases to test alternative ways of settlement using digital forms of money to develop the foundations for tokenised markets.
This will take place across a range of asset classes, including fixed income, private markets, trade receivables and carbon credits, while proposed settlement assets for the use cases include stablecoins, bank deposit tokens, and pilot wholesale central bank digital currency (CBDC), as well as new ways of using banks’ existing exchange settlement accounts at the RBA.
The initiative mirrors efforts in Singapore, where the financial regulator outlined late last year its vision for commercialising tokenised assets and rails. Private sector initiatives are also gaining traction. When major economic powers like the United States of America begin putting foundational data ‘on-chain’, the direction of travel is undeniable, and as both central banks and private-sector companies take steps to invest into new post-trade systems, the risks are changing from getting investments into the future wrong to not making any.
Scenarios for FX Settlement: Experimenting at the Edges vs Wholesale Adoption of DLT and Tokenisation
Best Case: Tokenised commercial bank money and ledger-based settlement orchestrations deliver real-time, PvP settlement at scale. Our collaborations (powered by Baton) with Partior and Fnality demonstrate how ledger-based innovation can expand liquidity choice and reduce counterparty risk.
Middle Ground: Multiple competing digital settlement networks emerge, creating pockets of efficiency but also new interoperability headaches.
Worst Case: Regulatory divergence or lack of adoption leaves banks uncomfortably straddling legacy and digital infrastructures—duplicating costs without reaping the promised savings.
In short, infrastructure has been built. The point where it makes more sense to build new rather than patch the old is already here. Now is the time for the industry to come together, embrace these live networks, and unlock the immense value in efficiency and risk reduction. The future is already waiting – there’s no “big bang” moment left to wait for.