Definition ∞ Recovery and resolution refers to the processes and frameworks designed to manage and mitigate the impact of financial distress or failure within institutions or systems. In the context of digital assets, this involves establishing mechanisms to restore operations or liquidate assets in the event of a platform collapse, major hack, or other systemic issue. The objective is to protect users and maintain overall market stability by providing clear procedures for handling adverse events. This concept is particularly relevant for centralized entities operating in the crypto space.
Context ∞ The topic of recovery and resolution has gained significant attention in crypto news, particularly following major exchange failures or security breaches. Regulators and industry participants are increasingly discussing the need for robust frameworks to address these events, aiming to protect consumers and prevent systemic risks. The absence of clear recovery and resolution plans for many decentralized protocols remains a point of debate. Establishing such frameworks is crucial for broader institutional adoption.
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