Circle outlines seven-part framework for evaluating institutional wrapped assets

Circle has published a seven-part framework for judging whether wrapped assets are fit for institutional use. The test covers custody, reserves, redemption, compliance, operational resilience, governance and composability. The core idea is a weakest-link rule. Circle’s position is that a wrapped asset is only as strong as its worst-performing category, so a token with spotless custody and sloppy redemption still fails the test. Seven dimensions, one weak link A wrapped asset is a token on one blockchain that represents an asset held somewhere else. Circle’s framework turns that into a checklist with seven categories: Custody: who holds the underlying asset, and under what legal structure. Reserves: whether the backing actually exists in full, and whether anyone can verify it. Redemption: how holders convert the token back into the original asset. Compliance: which regulator oversees the issuer and what rules apply. Operational resilience: how well the system holds up when something breaks. Governance: who makes decisions about the asset and how. Composability: how easily the token plugs into other onchain applications and workflows. Circle grades its own homework Circle did not sto...