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Those rights differ from bank-deposit protection and do not normally give the holder title to a specific reserve asset. What a holder can recover depends on where the tokens are held, whether direct issuer redemption is available, and how reserves are treated if the company cannot meet its obligations.
Key Takeaways
- Reserve backing is not direct reserve ownership.
- Direct redemption often requires issuer eligibility.
- Exchange users may claim against the exchange.
- A depeg can precede an issuer failure.
- MiCA gives EU holders defined issuer claims.
Start by identifying what has failed
“The stablecoin failed” can describe several different events. The issuing company may be insolvent. A bank or custodian holding part of the reserve may be under stress. An exchange where a customer keeps the token may suspend withdrawals. Or the token may trade below its reference currency even while issuer redemption remains available to eligible customers.
The recovery route changes according to which part of the arrangeme...
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