Recovery Resolution

Definition ∞ Recovery Resolution pertains to the structured processes and plans designed to restore a financial institution or system to operational stability following a severe crisis or failure. In the digital asset sector, this involves mechanisms for managing the insolvency of crypto exchanges, stablecoin issuers, or decentralized finance protocols. These plans aim to minimize disruption, protect user assets, and ensure the orderly winding down or restructuring of distressed entities. Effective recovery measures are essential for maintaining overall market confidence.
Context ∞ The discussion surrounding recovery resolution in crypto is gaining urgency as regulators seek to address the systemic risks posed by large digital asset firms and protocols. A key debate involves establishing clear legal frameworks and operational procedures for handling failures in a decentralized and globally distributed environment. Future developments will likely include international cooperation on cross-border resolution strategies and the development of specialized insolvency regimes tailored to the unique characteristics of digital assets.