In traditional finance, a cross-border FX payment involves three separate systems operated by different providers. Musubi collapses all three into a single atomic operation.
Three Systems, One Transaction
| Function | TradFi | Musubi |
|---|
| FX execution | Trading venue or bank dealer (Bloomberg, 360T, bank’s internal desk) | Built-in competitive RFQ — market makers bid, institution selects best price |
| Settlement | CLS Bank (PvP settlement, 5-hour daily window, pre-funding required) | Atomic 4-leg DvP — both currency legs in one transaction, ~4 seconds |
| Cross-border delivery | Correspondent banking chain (SWIFT messages, 2-4 intermediary banks, 1-3 days) | Direct custodian-to-custodian delivery as part of the atomic settlement |
Where the Risk Lives
| Risk | TradFi | Musubi |
|---|
| Counterparty risk | Present between trade and CLS settlement (hours to days) | Eliminated — atomic DvP, no time gap |
| Herstatt risk | Mitigated by CLS but not eliminated outside CLS hours | Eliminated — both legs in one transaction |
| Settlement failure | Partial settlement possible; manual resolution required | Impossible — all four legs succeed or all roll back |
| Correspondent risk | Each intermediary bank in the chain is a failure point | No intermediaries — direct custodian-to-custodian |
| FX execution risk | Rate can move between trade and settlement | Rate locked at quote acceptance, settlement in ~4 seconds |
What Each Participant Replaces
Institution
Custodian
Market Maker
| Today | With Musubi |
|---|
| Call your FX desk or log into a trading platform | Submit a payment intent via API |
| Negotiate rate with one or two dealers | Receive competing quotes from multiple market makers |
| Instruct your correspondent bank to wire proceeds | Settlement + delivery happen automatically after quote acceptance |
| Wait 1-3 business days for confirmation | Settlement confirmation in ~15 seconds |
| Reconcile across SWIFT messages, FX confirmations, and bank statements | One transaction_hash covers everything |
| Today | With Musubi |
|---|
| Receive instructions via email/portal, manually approve | Co-sign trades cryptographically via API |
| Wait for settlement confirmation from CLS/correspondent | Active participant in atomic DvP — your signature is required |
| Reconcile across multiple message types | Single transaction_hash per settlement |
| Today | With Musubi |
|---|
| Quote on voice, chat, or electronic venues (known counterparty) | Quote via anonymized RFQ (counterparty identity never revealed) |
| Manage settlement risk during CLS window | No settlement risk — atomic DvP |
| Pre-fund CLS positions intraday | No pre-funding — assets committed only at settlement execution |
The CLS Analogy
Musubi is closest in function to CLS Bank (Continuous Linked Settlement) — both eliminate counterparty risk by settling both currency legs simultaneously.
| CLS | Musubi |
|---|
| What it settles | Fiat FX (18 currencies) | Stablecoin FX (JPYSC0/USDCx) |
| FX execution | Separate — done before CLS | Built-in — competitive RFQ is part of the flow |
| Settlement speed | 5-hour daily window | ~15 seconds, 24/7 |
| Pre-funding | Required during settlement window | Not required |
| Participants | ~70 settlement members (major banks) | Institutions + custodians + market makers |
| Cross-border delivery | Separate — via correspondent banking after CLS | Included — custodian-to-custodian delivery is part of the atomic settlement |
| Mechanism | Multilateral netting + simultaneous settlement | Gross atomic 4-leg DvP |
Gross settlement (every trade settles individually) works here because settlement is instant. CLS uses netting to reduce liquidity requirements across a 5-hour window. When settlement takes 4 seconds, netting is unnecessary.
