User Rights

Examines the clarity and enforceability of redemption terms, asset segregation provisions, and the recognition of beneficial ownership within the issuer's documentation.

Three sub-components are scored independently: redemption rights (explicit and time-bound, discretionary, or undisclosed), asset segregation (legally segregated, commingled, or unknown), and beneficial ownership (user as beneficial owner, ambiguous, or issuer as owner). A structural haircut applies to stated collateralization where asset segregation is unclear or undisclosed; this haircut flows directly into the Collateralization assessment.

Tier	Reasoning	Evidence
Clear redemption, segregated reserves, user as beneficial owner	Documented redemption rights, legally-segregated reserves, and beneficial ownership through a trust or equivalent structure together provide enforceable claims senior to general creditors and ring-fence reserves from issuer insolvency.	Matches MiCA Article 39's prompt-redemption-at-par requirement and customer-asset segregation rules in traditional finance (SEC Rule 15c3-3 and equivalents). Ondo USDY's published trust structure (BVI issuer + Delaware bankruptcy-remote asset holder) is the gold standard.
Discretionary or partially disclosed terms	Some rights are documented but contain discretionary suspension clauses, operational barriers, or partial protections; legal certainty exists on some dimensions while ambiguity persists on others.	Many issuers' Terms of Service explicitly allow redemptions to be postponed or refused during stress (historical Tether ToS), and large minimum redemption sizes effectively close direct redemption to retail holders. FDUSD's April 2025 run was amplified by retail inability to redeem directly.
Terms undisclosed or unenforceable	Treated as the worst case because the burden of proof sits with the issuer. Treating "undisclosed" as neutral would create a perverse incentive to publish less rather than more.	Prime Trust (2023) and Mt. Gox (2014) demonstrates that undisclosed customer-asset language leads to commingling and contested ownership in insolvency, with severe impact on user recovery. CFTC v. Tether (2021) demonstrated the cost of opaque reserve language.