Wind-Down Plan

A wind-down plan is a firm's written description of how it would cease operations in an orderly fashion and return client assets, covering the trigger conditions that would start the process, who has authority to declare them, how customer holdings would be reconciled and returned, how long the firm could keep paying staff and infrastructure while doing it, and what happens to records afterwards. Regulators increasingly treat it as a condition of doing business rather than a formality: an authorisation file for a crypto-asset service provider under the European Union's markets in crypto-assets regime includes one, and comparable expectations exist in the United Kingdom, Singapore and elsewhere. The reason is written across the failure record. Firms that collapsed did not usually fail because nobody realised they were failing; they failed messily because there was no rehearsed process for stopping, so withdrawals were frozen at the moment discretion was greatest and reconciliation began after the money had already moved. A plan does not prevent insolvency, and it is worth being clear that it cannot. What it changes is whether an exit is executed or improvised. For someone assessing a platform, the useful questions are whether the firm is subject to a regime requiring one at all, whether client assets are segregated well enough that a return is even possible, and whether the operating runway assumed by the plan is measured in months or in days.