diff --git a/loop/plan.md b/loop/plan.md
index 1d83b153..affa8554 100644
--- a/loop/plan.md
+++ b/loop/plan.md
@@ -283,7 +283,7 @@ Every test must pass **10 consecutive times** from BOTH .228→.198 AND .198→.
 
 - [x] **VC-03** — Added VC verification status to federation.list-nodes. Each node includes `vc_verified: bool` — true if a non-revoked FederationTrustCredential exists for that node's DID. VC-02 issues these during federation.join. (Full presentation exchange deferred.)
 
-- [ ] **VC-04** — (BLOCKED: .198 backend keeps crashing/restarting — 502 errors during tests. VC flow requires both nodes stable simultaneously. .228 VC issuance/verification works in isolation via test-all-features.sh. Cross-node VC exchange needs .198 stability fix.)
+- [ ] **VC-04** — (BLOCKED: identity.issue-credential returns "Operation failed" on .228. Error sanitization hides the real error. Both nodes stable now. Credentials directory exists with credentials.json. Identity records exist. The signing callback in credentials.rs may be failing. Needs error logging investigation — the `error!()` macro output isn't appearing in journalctl despite tracing level set to debug.)
 
 ---