Definition ∞ An own funds requirement is a regulatory mandate for financial institutions to maintain a minimum amount of capital from their own resources. This capital acts as a buffer against unexpected losses, ensuring the institution can absorb financial shocks without jeopardizing client assets or systemic stability. Such requirements are designed to promote prudence and reduce the likelihood of insolvency. In the context of digital assets, similar mandates are being considered for stablecoin issuers and crypto service providers to protect consumers.
Context ∞ The own funds requirement is a critical subject in news regarding cryptocurrency regulation, particularly concerning stablecoins and centralized digital asset custodians. Regulators worldwide are discussing how to apply traditional financial capital adequacy rules to the nascent digital asset sector. This aims to mitigate risks associated with volatile crypto markets and ensure consumer protection, thereby enhancing the credibility of digital finance.
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