Recovery Resolution Planning

Definition ∞ Recovery Resolution Planning is a strategic framework developed by financial institutions to prepare for and manage potential financial distress or failure. This planning outlines actions to restore financial health during a crisis (recovery) or to facilitate an orderly wind-down without causing systemic disruption (resolution). It aims to protect depositors, maintain financial stability, and minimize taxpayer exposure.
Context ∞ For crypto-native financial entities, recovery resolution planning is a nascent but critical area, especially given recent market instability events. Regulators are pressing for clear frameworks that address the unique characteristics of digital asset firms, including decentralized governance structures and the global, 24/7 nature of crypto markets. Establishing robust plans is essential for mitigating systemic risk as the digital asset sector grows and becomes more interconnected with traditional finance.