Auto-Conversion

Overview

What does Auto-Conversion mean?

Auto-Conversion is an automated process that converts an incoming or held asset into another asset when predefined conditions are met.

How it works in practice

Auto-conversion exchanges an incoming or held asset for another asset when an approved trigger occurs. A merchant may request stablecoin settlement even when customers pay with BTC or ETH. The processor evaluates the policy, checks the trade size and liquidity, selects a route, enforces a valid quote and slippage tolerance, executes and records the net proceeds. Conversion can happen immediately after a qualifying receipt, on a schedule, or above a balance threshold. The system must keep the original receipt and conversion as separate financial records.

Further operational details

Operationally, a merchant or treasury may convert received crypto into a stablecoin, maintain a target allocation, reduce volatility, or standardize settlement balances without approving every trade individually. The result should be interpreted through the fact that performance is evaluated using trigger accuracy, conversion rate, execution quality, completion time, failed attempts, exceptions, and reconciliation differences.

Limits and common misunderstandings

A rule set to convert 'all BTC' may unintentionally affect funds reserved for refunds or future payouts. Price drift, minimum order sizes and provider outages can stop a conversion after a customer payment has already succeeded.

Related glossary terms

Asset Conversion; Liquidity Routing; Slippage Tolerance