Delivery versus payment (DvP) links a securities transfer to its corresponding funds transfer: the security changes hands if and only if the payment does. A blockchain can be used to coordinate those transfers, but DvP is the settlement principle—not a feature unique to blockchain.
What does delivery versus payment mean?
A securities sale has two legs: the seller delivers the security to the buyer, and the buyer pays the agreed funds to the seller. DvP makes those legs conditional on each other, so neither party should complete its transfer without the corresponding transfer taking place. The arrangement is designed to mitigate principal risk: the danger that one side irrevocably gives up its asset but does not receive the countervalue. The Federal Reserve describes DvP in a US regulatory context; that definition should not be treated as a universal legal rule (Federal Reserve definition of delivery versus payment).
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For example, if a tokenised bond moves to the buyer but the funds transfer fails, the seller may be exposed to principal risk. If funds move but the bond does not, the buyer faces the equivalent risk. DvP is intended to link the two so the bond and funds transfer together, or neither does. The Bank for International Settlements calls DvP “the canonical example of the contingent performance of actions” in its 2025 report, The next-generation monetary and financial system (BIS 2025 report).
How can DvP work on a blockchain?
Tokenisation can apply to the security, the payment asset, or both. The key design question is whether the two tokens can be settled on one ledger or must be coordinated across separate platforms.
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Both legs on one ledger
If the security token and cash token are on the same ledger, a smart contract can validate the exchange instructions and transfer both in one atomic operation. In this context, atomic means both transfers complete together or neither completes. The BIS describes this as an instant and simultaneous transfer when validation succeeds (BIS settlement discussion).
That technical property does not by itself establish legal finality, guarantee that every blockchain transaction is atomic across systems, or eliminate all settlement risks. The legal and operational arrangements still matter.
Legs on separate ledgers
If the security and payment tokens are on different ledgers, the platforms need a cross-ledger coordination method. Such arrangements may use coordinated rules to lock and release tokens, but they are not automatically equivalent to one atomic transaction on a shared ledger. The BIS notes that cross-ledger approaches may reintroduce principal risk (BIS settlement discussion). Any design therefore needs to establish how the transfers are linked, when each becomes final, and what happens if one platform or transfer does not complete.
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The DvP model framework predates blockchain. A foundational report by the Committee on Payment and Settlement Systems (CPSS), published on 9 September 1992, examined DvP models and their effects on credit and liquidity risks (CPSS report on delivery versus payment). The models distinguish gross and net processing, especially how and when payment is settled; they do not change the basic meaning of conditional exchange.
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| Model | Securities leg | Payment leg |
|---|---|---|
| Model 1 | Each trade settles individually on a gross basis. | Each trade settles individually on a gross basis. |
| Model 2 | Deliveries settle individually on a gross basis through the processing cycle. | The resulting net payment obligation is settled at the end of the cycle; the BIS account describes a payment guarantee as part of the linkage. |
| Model 3 | Settles on a net basis. | Settles on a net basis. |
These are settlement-processing models, not a ranking of blockchain designs. A ledger implementation still has to specify whether its transfers are gross or net, how payment is assured, and when both legs are final. The BIS discusses the models alongside distributed-ledger settlement considerations (BIS settlement discussion).
Does blockchain make settlement risk disappear?
No. Effective DvP addresses principal risk by linking delivery and payment, but it does not make every risk disappear. In particular, cross-ledger coordination can create failure points or timing gaps that a shared-ledger atomic transfer is designed to avoid. Nor should technical atomicity be taken as proof of legal finality. Those questions depend on the specific settlement arrangement, including the assets being transferred, the platforms involved, the linkage mechanism, and the rules governing completion.
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What to check when assessing a blockchain DvP arrangement
- Ledger topology: Are both legs on one ledger, or do separate platforms need to coordinate?
- What is tokenised: Is the security tokenised, the payment asset, or both?
- Settlement basis: Are obligations settled individually gross or net, and how does the design map to the DvP model framework?
- Linkage and finality: What makes each transfer conditional on the other, when is each leg final, and could a cross-platform failure leave one party exposed?
The European Central Bank and Bank of Japan’s Stella project report examined distributed-ledger settlement as proof-of-concept research in 2018; it is not evidence by itself of current commercial deployment (Project Stella report). More broadly, tokenisation may offer settlement benefits, but those are potential outcomes rather than guarantees (BIS 2025 report).
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