Definition ∞ Asset Segregation is the practice of keeping different types of assets or investor funds separate from one another. This separation is a fundamental risk management technique designed to protect assets in case of insolvency or operational failures. In digital asset contexts, it ensures that a platform’s assets are distinct from client holdings, thereby providing a layer of security for users. Adherence to segregation principles is often a regulatory requirement and a hallmark of robust financial operations.
Context ∞ The ongoing discourse regarding Asset Segregation in the digital asset sphere is heavily influenced by recent high-profile insolvencies. Regulators are increasingly focusing on the implementation and enforcement of strict segregation protocols for custodians and exchanges. Debates persist regarding the most effective technical and operational mechanisms to guarantee complete separation, especially concerning complex derivative products and pooled liquidity mechanisms.
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