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Do you have a source for that? According to this (not so definitive) source [1] it's peer to peer like the rest of the continuity features.

[1] http://www.idownloadblog.com/2016/06/23/macos-sierra-preview...

I dont know the exact implementation. But following article suggests that there is some lag due to data being exchanged with iCloud.

http://www.cnet.com/au/how-to/macos-sierras-universal-clipbo...

I assume it will be backed by the same transport channel used for Handoff / Continuity, which is E2E-encrypted between devices and work on either wifi or bluetooth.

Agreed. "Copy Password to Clipboard", anyone? The thought of having that being transmitted unencrypted to a cloud server is not a nice one...