Minimum Capital Requirement

Definition ∞ Minimum capital requirement refers to the lowest amount of capital that financial institutions, such as banks or crypto exchanges, are legally mandated to hold. This requirement ensures that these entities possess sufficient financial resources to absorb potential losses and protect client funds. It acts as a regulatory safeguard to maintain financial stability. Adherence to this standard is mandatory.
Context ∞ For digital asset platforms, minimum capital requirements are a growing area of regulatory focus, aiming to mitigate risks associated with market volatility and operational failures. Jurisdictions worldwide are debating and implementing varying standards to protect users and prevent systemic risks within the crypto sector. News reports frequently discuss how these requirements influence the operational costs and competitive landscape for crypto businesses.