Definition ∞ Crypto Asset Segregation refers to the practice of keeping a client’s digital assets separate from the operating capital and other assets of the custodial entity. This separation is a critical security and regulatory measure, ensuring that client funds are protected in case of a firm’s insolvency or operational issues. It is a standard practice in traditional finance now extending to digital assets.
Context ∞ The primary discussion surrounding Crypto Asset Segregation revolves around establishing robust technical and legal frameworks to guarantee true separation and protect client interests. Regulatory bodies are increasingly scrutinizing how digital asset custodians manage and report client holdings. Future developments will likely see more stringent requirements and independent audits to verify segregation practices, thereby enhancing investor confidence.
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