For risk committees, second-line oversight, market-infrastructure leads, and diligence partners who need named owners, artifacts, and pass/fail tests before and after launch.
MVEP and CLII on SSRN · ~250 investments diligenced · Led team of 4 analysts · Fed/FRBNY-track gateway research
Built for teams assessing whether a digital-asset product’s controls, monitoring infrastructure, and escalation paths hold under stress. This version frames the work through risk assessment, control-layer concentration, and operator accountability: where equivalence breaks first, what degrades after approval, and what should trigger review, remediation, or suspension.
Legal, operational, and economic equivalence at approval, with named artifacts and pass/fail tests aligned to how risk committees actually challenge digital-asset products. The nine diligence categories are: rights parity, system of record, records and reconciliation, custody and customer property, insolvency posture, settlement finality, reorg and exception handling, governance and change control, and disclosures. Typical artifacts include rights-mapping opinions, reconciliation SLAs, custody agreements with insolvency language, and governance audit logs showing the policy has been followed.
The CLII classifies compliance posture at the gateway layer (custody segregation, reconciliation integrity, and concentration risk) and is distinct from resilience scoring: Circle and Coinbase had near-identical CLII scores but showed sharply different stress retention during SVB, consistent with entity-specific banking exposure driving outcomes. The CLII extends diligence after approval by tracking deterioration in the control surface and flagging when conditions warrant re-evaluation, conditional continuation, or suspension.
In the current Operational Risk paper, risk is assigned at the infrastructure-group level. Operator-level heterogeneity (whether smaller operators face systematically higher risk) is explicitly future work, not a demonstrated finding.
Custody segregation, settlement finality (including value integrity and convertibility, not block confirmation alone), records and reconciliation, and insolvency posture under stress. The MVEP requires named artifacts and pass/fail tests for each: a rights-mapping opinion, a reconciliation SLA, a custody agreement with insolvency language, and a governance audit log showing the policy has been followed. The SVB weekend is the reference case: tier labels, attestation reports, and “institutional grade” designations all failed to surface the infrastructure risk that broke USDC’s peg.
Approval starts the monitoring cycle. One-time MVEP diligence establishes the entry standard; CLII-based monitoring tracks whether the product continues to maintain its control posture over time. A tier-boundary crossing or dimension-level deterioration triggers re-evaluation, with three possible outcomes: reaffirmation, conditional continuation (with defined remediation timeline), or suspension of new issuance. Counterparties must be notified within 24 hours of initiating review.
Thresholds tied to concentration, routing dependency, and governance outcomes under infrastructure shock. In the Operational Risk simulations, reputation-weighted governance collapsed to an average score of 0.18 on a 5.0 scale by year five when the recovery threshold was set above the operational floor operators could reliably achieve. The fix is specific: lowering the uptime threshold from 0.99 to 0.95 restores a workable reputation floor.
Closest papers for this lens.
Three equivalence claims (legal, operational, economic) tested through nine diligence categories with named artifacts and pass/fail tests. MVEP is the entry gate; CLII is the drift detector layered on top. Anchored on the SVB weekend’s cascading infrastructure failures.
Read
Gateway concentration, regime-dependent monetary-policy transmission, and operator accountability under stress. Introduces the CLII, which measures how heavily regulated each gateway is across five dimensions. A high score means more regulatory obligations; stress performance depends on reserve-bank exposure and other entity-specific conditions.
Read
624-configuration simulation: adaptive controllers become more resilient under infrastructure shocks while reputation-weighted governance can collapse when the recovery threshold is set above what operators can reliably achieve. The fix is the recovery threshold (0.95 restores a workable floor), not the decay rate.
Read
Three digital-dollar objects, Layer 0, and deposit mutation. The GENIUS Act reinforces the payment-stablecoin perimeter; deposit tokens and yield wrappers require separate treatment.
Open paper summary
How CLARITY-style provisions (House-passed form analyzed here) attach compliance at the control layer: interfaces, routing defaults, hold workflows, and audit logs.
Open paper summaryRisk, controls, governance, or market-infrastructure diligence. Tell me what you’re evaluating and I’ll send the most relevant framework, resume version, or supporting material.