Definition ∞ Asset reserve requirements stipulate that an issuer of a digital asset must hold a specified quantity of underlying collateral to back the issued tokens. These reserves ensure the redeemability and stability of certain digital assets, particularly stablecoins. The requirements provide a foundational layer of assurance regarding the value proposition of these tokens.
Context ∞ Regulatory bodies globally are actively debating the appropriate level and composition of asset reserve requirements for stablecoins and other asset-backed digital tokens. Transparency and regular auditing of these reserves remain central to public trust and regulatory compliance. Future legislation will likely standardize these financial safeguards across jurisdictions.
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