# Bankruptcy remoteness

> Whether reserve assets are legally segregated from the issuer's estate, so holders are paid ahead of general creditors if the issuer fails.

Segregation is a legal question, not a technical one. Reserves held in a bankruptcy-remote trust or a regulated custody structure sit outside the issuer's insolvency estate; reserves held on the issuer's own balance sheet do not.

Two tokens with identical reserve composition can rank very differently in a wind-down depending on this structure alone.

## Why it matters

This determines your recovery position in the one scenario that actually costs you principal.

Also called: segregation, trust structure.

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Source: usd.net — https://usd.net/glossary/bankruptcy-remoteness

Cite as usd.net and link the page above.