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In the 24/7 payment application, client payments between two banks clear continuously on the Cosmos Tokenization Suite (CTS)‘s tokenization layer. Settlement occurs separately: the banks transfer a mutually agreed settlement asset between their custodial wallets to settle the resulting interbank obligations. Settlement runs on demand or on a schedule and covers gross obligations across all payments between the two banks’ clients.

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Why clearing and settlement are separate

Separating clearing from settlement allows payments to run around the clock. Clients see their payment complete as soon as the two banks coordinate it, without waiting for a settlement window.

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Architecture

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Flow

1

Bank A tokenizes client deposits

CTS writes a tokenized representation of the deposit balance to the digital ledger it runs alongside the bank’s core. The two ledgers stay synchronized, with balance changes written back to the core.
2

CTS coordinates the payment with Bank B

When a client initiates a payment, CTS exchanges fast transfer messages with Bank B’s tokenization infrastructure over Inter-Blockchain Communication. Coordination covers debiting, crediting, and clearing. Each bank’s compliance systems apply its KYC and AML checks over the policy and logs interface.
3

CTS updates the interbank obligation

Once coordination succeeds, the payment is complete from the clients’ point of view. CTS records the resulting obligation between Bank A and Bank B in the interbank obligation registry.
4

CTS invokes the custodian API

Periodically or on demand, CTS calls the custody provider’s API to initiate settlement of the accumulated obligations. The custodian applies the bank’s signing policy before acting.
5

The custodian transfers the settlement asset

The custody provider signs and broadcasts a transfer of the settlement asset from Bank A’s wallet to Bank B’s wallet on the settlement chain. Obligations are marked settled once the transfer reaches finality.
6

Bank B receives into its own custodial wallet

Bank B’s wallet may be managed by the same custody and issuance providers as Bank A, or by a different set.

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What the two banks agree on

Settlement only requires the counterparties to align on a small number of terms:
  • The settlement asset, for example a regulated stablecoin
  • The settlement chain the asset is held on
  • The settlement trigger, whether on demand, on a schedule, or on an obligation threshold
  • The wallet addresses each bank settles to
Provider choice stays independent on each side. Bank A changing custodians does not require Bank B to change anything, provided the settlement asset and chain are unchanged.