Wind-Down Plan

Definition ∞ A wind-down plan is a strategic document detailing the orderly cessation of operations for a financial entity or digital asset service. This plan outlines the procedures for returning client assets, settling outstanding obligations, notifying customers, and managing regulatory compliance during a business closure. For crypto firms, a robust wind-down plan is crucial for mitigating systemic risk and protecting user funds in the event of insolvency or operational failure. It ensures a responsible exit from the market.
Context ∞ Wind-down plans are increasingly discussed in crypto news as regulators worldwide focus on establishing frameworks for market stability and consumer protection. The key debate centers on mandating such plans for digital asset service providers to prevent chaotic collapses that could harm investors and the broader market. Regulators view these plans as essential for managing the risks associated with novel financial services.