When holders demand redemption: what it costs to be wrong
When holders demand redemption, the issuer must respond inside the window it disclosed to the market. Missing that window does not just delay a payout. It creates a duty to notify the competent authority, invites contractual claims from holders, and can trigger a wider review of the token programme. The clock starts when the request arrives, not when the issuer gets round to it.
The legal basis for the redemption right
The redemption right for holders of asset-referenced tokens and e-money tokens is set out in Regulation (EU) 2023/1114 (MiCA). The regulation requires issuers to keep a redemption policy inside the white paper and to execute redemption claims without undue delay. Where a redemption payment moves through a bank transfer, Regulation (EU) 2023/1113 (TFR) governs the information that must travel with that transfer. Both regulations apply directly across the European Union; neither depends on a national transposition act.
This matters for how an issuer defends its handling of a claim. There is no separate national statute to fall back on when the white paper is silent. The disclosed policy, and the two regulations behind it, are the whole basis for what happened next.
What changes once a holder submits the claim
Once the claim is logged, the issuer carries three separate clocks. The first is the redemption window disclosed in the white paper. The second is the internal verification step — checking the holder's balance and identity before any payment moves. The third is the notification clock that starts the moment the issuer expects to miss the first window.
Treating these as one clock is the most common mistake. An issuer that spends the whole disclosed window on verification alone has already missed the deadline for payment, and the notification duty triggers at the same moment, not later. The two failures compound into one file.
What to do, in order
Six steps cover most redemption claims. Skipping the order rarely saves time; it usually creates a second problem on top of the first.
| Step | Action | Who does it | Timing |
|---|---|---|---|
| 1 | Log the request with a timestamp | Compliance officer | Immediately on receipt |
| 2 | Verify holder identity and token balance | Operations team | Within hours, not days |
| 3 | Check the redemption terms in the current white paper | Legal counsel | Same day |
| 4 | Calculate the redemption amount by the disclosed method | Finance team | Before the window closes |
| 5 | Execute payment inside the disclosed window | Treasury | Before the window closes |
| 6 | Notify the competent authority if the window will be missed | Legal counsel | As soon as the risk is known |
Steps one and two decide everything that follows. A request logged late understates how much time actually remains. A balance verified against the wrong ledger snapshot produces a wrong amount, and a wrong amount is itself a form of getting it wrong, even if the payment arrives on time.
Who decides, and on what record
The competent authority designated under Regulation (EU) 2023/1114 (MiCA) reviews redemption disputes and delayed payouts. It works from a documentary record: the timestamp of the original request, the redemption policy published in the white paper at the time of the claim, correspondence with the holder, and the payment record itself.
An issuer without a clean timestamp has nothing to argue from. This is why step one on the table above carries more weight than its place in the sequence suggests. A dispute rarely turns on whether the payment was fair; it turns on whether the clock was recorded correctly at the start.
If your situation differs
- If the token is an e-money token, the redemption right sits closer to a deposit claim, and delay is judged more strictly.
- If the white paper sets a fixed redemption window rather than a "without undue delay" standard, that fixed window binds the issuer regardless of operational load.
- If several holders submit claims at once, each claim keeps its own clock; a queue does not extend anyone's deadline.
What this page does not cover
This page sets out order, timing, and the deciding authority. It does not calculate a specific redemption amount, and it does not replace a jurisdiction-specific reading of your white paper's exact wording.
If the redemption claim involves a counterparty registered in the United States, order Counterparty report united states before deciding how to respond.
If the dispute turns on a specific document — a signed white paper version, a term sheet, a prior notice — order Document report united states to confirm what the document actually says.
If the open question is which regime applies to the issuer or the holder, order Jurisdiction report united states rather than guessing from marketing materials.
For process guidance beyond this page, see How to reach a partner and its limits.
Verified
Reviewed 6 June 2025. Sources: Regulation (EU) 2023/1114 (MiCA); Regulation (EU) 2023/1113 (TFR).
Related reading
See also: When a white paper needs an update — the situation that most often precedes a redemption dispute, and the one this page assumes has already occurred.
FAQ
What is the first step when holders demand redemption?
Log the request with a timestamp and confirm the holder's balance before any calculation begins. Everything else in the file depends on this record being accurate.
Which deadline is already running?
The redemption window disclosed in the current white paper starts the moment the request is received, not when the issuer begins processing it.
Who decides, and on what evidence?
The competent authority designated under Regulation (EU) 2023/1114 (MiCA) decides, working from the timestamp of the request, the disclosed redemption policy, correspondence with the holder, and the payment record.