Definition ∞ Liquidity buffer requirements are regulatory mandates compelling financial institutions to hold a certain amount of highly liquid, unencumbered assets. These reserves are intended to enable institutions to meet short-term financial obligations during periods of market stress or unexpected outflows. They act as a safeguard against liquidity shortages. This ensures operational continuity and financial stability.
Context ∞ In crypto news, liquidity buffer requirements are increasingly discussed as regulators seek to apply traditional financial stability principles to digital asset service providers. Reports may highlight proposals for exchanges and custodians to maintain adequate liquid reserves to protect customer funds. Compliance with these requirements is a significant challenge and focus for regulated crypto entities.
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