> 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/risk/stablecoin-specific-risks.md).

# Stablecoin Specific Risks

*Reserve adequacy, depegging, redemption pressure, and blockchain-network risks specific to VNX stablecoins (VCHF, VGBP).*

## Scope

This summary covers the stablecoin-specific risk family identified in the Stablecoin Risk Management Policy: reserve adequacy, market, redemption pressure, depegging, operational, and reputational risks. It applies to currently issued VCHF and VGBP, and to any further VNX-issued fiat-pegged stablecoins under the DABA Class M licence. The risks are layered on top of the general risk taxonomy in enterprise risk framework.

## Principles

* **100% backing always** — reserves held in segregated, ring-fenced accounts must equal or exceed the face value of stablecoins outstanding at all times.
* **Currency match** — reserves are held in the same currency as the liability (CHF for VCHF, GBP for VGBP) unless BMA approves otherwise.
* **Depeg discipline** — peg deviation is monitored and escalated by defined thresholds; public disclosure on >1% sustained deviation.
* **Redemption-stress preparedness** — predefined cash tranches and emergency-access procedures triggered by daily redemption volumes.
* **Network-risk controls** — multiple chains supported, but with a unified custody, screening, and signing architecture.

## Key controls

| Risk                                 | Trigger / threshold                             | Control                                                                                                               |
| ------------------------------------ | ----------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- |
| Reserve adequacy                     | 100% backing must hold continuously             | Daily valuation; monthly attestation; fiduciary bank; BCB segregation                                                 |
| Depegging — investigation            | >0.5% deviation lasting >24 hours               | Internal investigation; market surveillance                                                                           |
| Depegging — disclosure               | >1% deviation                                   | Public disclosure and BMA notification                                                                                |
| Redemption pressure                  | Daily redemptions >10% of circulating supply    | Liquidity position review; emergency reserve tranche access                                                           |
| Liquidity buffer                     | ≥10% T+0 cash; ≥90% in 48-hour deposits         | Treasury operations; daily cash report                                                                                |
| Operational                          | Custody co-mingling prohibited                  | Segregated wallets; M-of-N multi-sig; daily reconciliation                                                            |
| Reputational                         | Material risk events                            | Communications protocol; Senior Representative BMA notification                                                       |
| Blockchain network risk              | Chain-level outages, reorgs, or contract issues | Multi-chain deployment (VCHF 6 chains; VGBP 4 chains); pause / mint controls; AML screening at the on-chain perimeter |
| Travel Rule timing                   | Hosted/unhosted wallet transfers                | Pre-screening; whitelisted wallets; counterparty data exchange                                                        |
| Market risk on virtual-asset funding | BTC/ETH/stable swings during conversion         | Real-time API quotes with rate-confirmation window                                                                    |

## Reserve and operational backstops

Reserves backing VNX stablecoins are held in segregated bank accounts at Bermuda Commercial Bank or other regulated financial institutions, with stablecoin reserves held at a dedicated fiduciary bank. At least 10% of total reserves is maintained in fiat cash at all times to guarantee immediate redemption; the remainder sits in deposits redeemable within 48 hours. Investment of reserves outside that perimeter requires prior BMA consent.

## Reporting and review

Stablecoin-specific risks are reviewed at the same Board cadence as the broader ERM framework — annual policy review, standing ARC Committee meetings, and event-driven escalations. Depeg events trigger a defined investigation/disclosure path; redemption-pressure events trigger a liquidity review and emergency tranche access. 

## Related policies and pages

* [Enterprise Risk Framework](/vnx-global/institutional/risk/enterprise-risk-framework.md)
* [Reserve Management](/vnx-global/institutional/reserve/reserve-management.md)
* [Liquidity Buffers](/vnx-global/institutional/reserve/liquidity-buffers.md)
* [Stablecoins](/vnx-global/institutional/products/stablecoins.md)
* [Minting and Redemption](/vnx-global/institutional/products/minting-and-redemption.md)
* [Reserve Transparency](/vnx-global/transparency/reserve-transparency.md)