Definition ∞ Non-cash collateral refers to assets other than traditional currency used to secure financial obligations. In the context of digital assets, this typically includes cryptocurrencies, stablecoins, or tokenized real-world assets pledged against loans or derivatives positions. It diversifies the types of security available in financial transactions.
Context ∞ The acceptance and valuation of non-cash collateral, particularly digital assets, are significant considerations for both traditional and decentralized financial institutions. Regulatory frameworks are evolving to address the unique risks associated with the volatility and custody of digital non-cash collateral, aiming to establish clear guidelines for its use.
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