Issuer failure / insolvency
Issuer failure (working definition) is the case where a stablecoin issuer cannot meet its obligations, including in insolvency. Under the GENIUS Act, in an insolvency proceeding of a permitted payment stablecoin issuer, holders' claims have priority, on a ratable basis, over the issuer's other creditors with respect to required reserves. MiCA requires issuers of asset-referenced tokens, and through Article 55 issuers of e-money tokens, to keep an operational plan for orderly redemption if they are unable or likely to be unable to meet their obligations.
What the sources say
| Source | Quote | Link |
|---|---|---|
| GENIUS Act sec. 11(a)(1): holder priority | "(1) the claim of a person holding payment stablecoins issued by the permitted payment stablecoin issuer shall have priority, on a ratable basis with the claims of other persons holding such payment stablecoins, over the claims of the permitted payment stablecoin issuer and any other holder of claims against the permitted payment stablecoin issuer, with respect to required payment stablecoin reserves;" | govinfo.gov |
| GENIUS Act sec. 11 heading | "SEC. 11. TREATMENT OF PAYMENT STABLECOIN ISSUERS IN INSOLVENCY PROCEEDINGS." | govinfo.gov |
| MiCA Art. 47(1): redemption plan | "An issuer of an asset-referenced token shall draw up and maintain an operational plan to support the orderly redemption of each asset-referenced token, which is to be implemented upon a decision by the competent authority that the issuer is unable or likely to be unable to fulfil its obligations, including in the case of insolvency" | publications.europa.eu |
| MiCA Art. 55: applies to EMT issuers | "Title III, Chapter 6 shall apply mutatis mutandis to issuers of e-money tokens." | publications.europa.eu |
| MiCA ES Art. 47(1): Spanish wording | "El emisor de una ficha referenciada a activos elaborará y mantendrá un plan operativo para apoyar el reembolso ordenado de cada ficha referenciada a activos, que ha de ejecutarse previa decisión de la autoridad competente de que el emisor no puede o es probable que no pueda cumplir sus obligaciones, también en caso de insolvencia" | publications.europa.eu |
| BCB Resolution 520: custodied assets on insolvency or bankruptcy of the provider | "VI - a prestadora de serviços de ativos virtuais, atendendo a ordem ou instrução expressa do titular dos ativos virtuais, deve resgatar os ativos virtuais custodiados e transferi-los ao seu titular ou contratar o serviço de custódia desses ativos com outro custodiante de ativos virtuais, nas hipóteses de insolvência, decretação de falência ou regime de resolução por parte de autoridade competente" | bcb.gov.br |
Related terms
- Redemption
- Reserve / reserve assets
- Payment stablecoin (GENIUS Act)
- E-money token (EMT, MiCA)
- Asset-referenced token (ART, MiCA)
- Deposit insurance
See also
- Explainer: What happens to my USDT or USDC if the issuer fails?
- Review: revain.org/coins/eurxt/
- Review: revain.org/coins/redcoin/
Checked against the sources on 2026-11-01.
revain.org
Sources
- https://www.govinfo.gov/content/pkg/PLAW-119publ27/html/PLAW-119publ27.htm
- https://publications.europa.eu/resource/cellar/01d55833-0660-11ee-b12e-01aa75ed71a1.0006.03/DOC_1
- https://publications.europa.eu/resource/cellar/01d55833-0660-11ee-b12e-01aa75ed71a1.0023.03/DOC_1
- https://www.bcb.gov.br/estabilidadefinanceira/exibenormativo?tipo=Resolu%C3%A7%C3%A3o%20BCB&numero=520