Definition ∞ Liquidity preparation involves measures taken by entities to ensure they possess sufficient liquid assets to meet financial obligations. This planning is crucial for managing potential withdrawals, redemptions, or market downturns. In the digital asset sector, it means holding enough readily convertible crypto or fiat to cover user demands. It is a key aspect of risk management for platforms.
Context ∞ The discussion around liquidity preparation in the digital asset industry is a critical focus for regulators and financial institutions. Recent market volatility and platform failures have underscored the importance of robust liquidity management. News often reports on regulatory proposals for crypto exchanges and custodians to maintain adequate reserves, aiming to protect customer funds and prevent systemic disruptions.
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