Client fund segregation is the practice where financial institutions hold customer assets separate from their own operational funds. For digital asset exchanges and custodians, this means maintaining distinct wallets or accounts for client cryptocurrencies. This measure provides a layer of protection for users against exchange insolvency or mismanagement.
Context
News reports often highlight client fund segregation following incidents of exchange hacks or collapses, underscoring its importance for investor protection. Regulatory bodies increasingly mandate strict segregation rules for crypto service providers to enhance market confidence. Users should monitor platforms for transparent adherence to these security protocols.
Firms must immediately integrate global operations into the domestic DTSP licensing framework to mitigate criminal penalties and arbitrage risk by June 30.
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