> For the complete documentation index, see [llms.txt](https://vnx.gitbook.io/vnx-global/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vnx.gitbook.io/vnx-global/institutional/products/minting-and-redemption.md). # Minting and Redemption *Institutional minting and redemption flows for VNX stablecoins, with eligibility, KYB, and fiduciary funding.* ## Overview VNX stablecoins (VCHF, VGBP) are minted upon confirmation of fiat funding of the segregated fiduciary account, and redeemed at par at any time per customer instruction. The flow supports two execution paths on the mint side (new issuance against new reserve, or proprietary-trade fill from VNX's liquidity pool) and two paths on the redeem side (direct cancellation against reserves, or buyback into the liquidity pool). An optional crypto-conversion leg is available on either side via VNX's external regulated provider. This page is the institutional-track summary; see Developer Track for sequence-level integration. ## Actors * **Customer (institutional, verified)** — initiates the mint or redemption. * **Customer's bank** — wires fiat to VNX bank account. * **VNX Platform** — order management, balance check, ledger updates, and customer interface. * **VNX Bank Account** — segregated client bank account used for receiving and disbursing client fiat funds.. * **Fiduciary Bank** — holds the stablecoin reserves. * **VNX Liquidity Pool** — proprietary-trade source/sink for stablecoins. * **VNX Transitional Wallet** — receives virtual-asset funding before AML check. * **External regulated provider** — external regulated provider for fiat↔crypto conversion. * **Compliance Engine** — AML/ATF, sanctions, Travel Rule. ## Sequence diagram ```mermaid sequenceDiagram participant C as Customer participant CB as Customer Bank participant VB as VNX Bank Account participant FB as Fiduciary Bank participant VP as VNX Platform participant LP as VNX Liquidity Pool participant TW as VNX Transitional Wallet participant CCP as External regulated provider Note over C,VP: Fiat-funded mint C->>CB: 1. Initiate fiat transfer CB->>VB: Funds arrive (KYB / due diligence) VB->>VP: Credit user account C->>VP: 2. Order Stablecoin purchase alt Option 1 — New issuance VP->>FB: 3. Move fiat to reserve FB-->>VP: Reserve increased VP-->>C: Mint stables to wallet (≈1 bd) else Option 2 — Prop trade VP->>LP: 4. Source stables from pool LP-->>C: Stables delivered (≈1 bd) end Note over C,CCP: Virtual-asset-funded mint C->>TW: 1'. Transfer crypto / tokens TW->>VP: AML + due diligence VP->>CCP: Convert virtual assets to fiat CCP-->>VP: Fiat VP-->>C: Deliver stables (≈3h, Travel Rule) Note over C,VP: Redemption C->>VP: R1. Redemption request alt Direct redemption VP->>FB: R2. Reduce stables reserve FB-->>VB: Release fiat VB->>CB: Fiat to Customer bank (≈1 bd) else Prop-trade buyback VP->>LP: R3. Buy stables to pool LP-->>VB: Fiat available VB->>CB: Fiat to Customer bank (≈1 bd) end opt Convert to crypto VP->>CCP: R4. Fiat → crypto CCP-->>C: Crypto to wallet (≈3h) end ``` ## Step-by-step 1. **Funding** — Customer wires fiat to VNX bank account; due diligence completes; funds credited to platform user account. 2. **Order** — Customer orders stablecoin purchase on platform. 3. **Issuance path (Option 1)** — VNX moves fiat into the fiduciary reserve, reserve grows, stables minted to customer wallet (≈1 business day). 4. **Prop-trade path (Option 2)** — VNX sells customer previously-issued stables from its liquidity pool (≈1 business day). 5. **Virtual-asset funding** — Customer transfers crypto to VNX transitional wallet; AML check at the Collective Customers' Wallet; conversion via the external regulated provider; stables delivered (≈3 hours, subject to Travel Rule). 6. **Redemption (R1-R3)** — Customer instructs redemption; direct cancellation against the fiduciary reserve, or buyback into liquidity pool; fiat released to customer bank (≈1 business day). 7. **Optional crypto conversion (R4)** — Customer may receive proceeds in crypto via the external regulated provider (≈3 hours). 8. **Withdrawal** — Customer withdraws proceeds (fiat or crypto) from platform. ## Edge cases and failure modes * **Compliance hold** — sanctions or AML hits trigger Enhanced Due Diligence; tokens may be held pending EDD. * **Travel Rule timeout** — counterparty data not delivered in time; transfer queued or rejected per policy. * **Depeg threshold** — if the depeg threshold (>0.5%/24h investigation; >1% disclosure) is met, public disclosure and BMA notification follow. * **Redemption pressure** — daily redemptions >10% of supply trigger liquidity-position review and emergency reserve-tranche access. * **Wallet not whitelisted** — delivery to external wallet blocked until whitelisting completes. * **Customer eligibility** — VCHF/VGBP minimum transaction threshold is CHF/GBP 100,000; verified Customers only. ## Controls and reconciliation Daily reconciliation matches bank balances and on-chain wallet balances to the internal ledger. M-of-N multi-signature signing (minimum two signatories) controls minting and burning. Audit logs and approval evidence are retained for at least five years. Co-mingling is prohibited by both VNX and BCB. ## Related * [Stablecoins](/vnx-global/institutional/products/stablecoins.md) * [On Off ramp](/vnx-global/institutional/products/on-off-ramp.md) * [Reserve Management](/vnx-global/institutional/reserve/reserve-management.md) * [Asset Segregation](/vnx-global/institutional/custody/asset-segregation.md) * [Stablecoin Specific Risks](/vnx-global/institutional/risk/stablecoin-specific-risks.md) * [AML CTF Travel Rule](/vnx-global/institutional/regulatory/aml-ctf-travel-rule.md) * [Mint Flow](/vnx-global/developer/flows/mint-flow.md) * [Redeem Flow](/vnx-global/developer/flows/redeem-flow.md) * [Integrate Stablecoin Mint](/vnx-global/developer/guides/integrate-stablecoin-mint.md) * [Integrate Stablecoin Redeem](/vnx-global/developer/guides/integrate-stablecoin-redeem.md)