Does a Principal Trade Structure Eliminate the Need for an Escrow Service?

While a principal desk provides the counterparty, it does not entirely eliminate the need for an escrow or custody solution. For high-value crypto trades, an independent third-party custodian is still often used to ensure Delivery Versus Payment (DVP).

This mitigates the risk of the principal desk failing to deliver the asset or the buyer failing to deliver the payment, adding an extra layer of security beyond the desk's capital.