Orderly Wind-Down Plan

Definition ∞ An orderly wind-down plan is a predetermined strategy outlining the procedures and actions a cryptocurrency business or financial institution will undertake to cease its operations responsibly and minimize disruption. This plan typically includes provisions for safeguarding client assets, fulfilling outstanding obligations, communicating with stakeholders, and ensuring a smooth transition or liquidation process. Its purpose is to prevent sudden failures that could harm consumers, destabilize markets, or create systemic risks. Such plans are often a regulatory requirement.
Context ∞ Discussions around orderly wind-down plans are increasingly prominent in crypto news, particularly as regulators mandate such plans for licensed digital asset service providers. The collapses of several prominent crypto firms have highlighted the critical need for these plans to protect user funds and maintain market confidence. A key debate involves the scope and specificity required for these plans, ensuring they are robust enough to address the unique complexities of digital asset operations and cross-border regulatory challenges.