How Does the Settlement Process for a Crypto Futures Contract Differ from a Traditional Commodity Future?

Traditional commodity futures can be settled physically (delivery of the commodity) or financially (cash payment). Most crypto futures are settled financially, meaning the difference between the contract price and the spot price at expiration is exchanged in cash or stablecoins.

Physical settlement is less common due to the difficulty of transferring and storing the actual crypto asset. This preference for cash settlement simplifies the process and avoids logistical issues.