Operational risk control involves implementing measures and procedures to mitigate potential losses arising from inadequate or failed internal processes, systems, people, or external events. In the digital asset sector, this includes managing risks related to smart contract vulnerabilities, cybersecurity threats, human error, and technological malfunctions. Effective controls are essential for maintaining system integrity and user trust. This function safeguards against unforeseen disruptions.
Context
News often reports on operational risk control when detailing security breaches, protocol exploits, or regulatory requirements for digital asset platforms. Debates frequently address the trade-off between innovation and the need for robust security frameworks. Continuous improvement in these control mechanisms is vital for the long-term viability and mainstream adoption of blockchain technologies.
The No-Action Letter provides a crucial regulatory pathway for Registered Investment Advisers to custody digital assets with state-chartered trust entities.
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