What Is the Settlement Process for a Cash-Settled Crypto Futures Contract?

In a cash-settled crypto futures contract, upon expiration, there is no physical exchange of the underlying cryptocurrency. Instead, the difference between the contract's entry price and the final settlement price is paid in fiat currency or a stablecoin.

The final settlement price is typically determined by an index price calculated from multiple spot exchanges to prevent market manipulation. This process is simpler and avoids the complexities of physically delivering the digital asset.