Definition ∞ Exchange capital requirements are regulatory mandates specifying the minimum amount of financial reserves that cryptocurrency exchanges must hold. These requirements are put in place to ensure exchanges possess sufficient liquidity to cover potential losses, protect customer assets, and withstand market volatility. They serve as a safeguard against insolvency.
Context ∞ Capital requirements for cryptocurrency exchanges are a central component of evolving digital asset regulation globally. Discussions often focus on harmonizing these rules with traditional financial markets to reduce systemic risk and enhance consumer protection. Stricter capital rules can influence exchange operations, market liquidity, and the competitive landscape within the crypto industry.
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