Own funds requirements are regulatory mandates that stipulate the minimum amount of capital a financial institution or digital asset service provider must hold. These requirements ensure that entities possess sufficient liquid assets to cover potential losses and operational risks. In the crypto sector, they aim to safeguard customer assets and maintain financial stability within regulated exchanges, custodians, and other service providers. Adherence helps prevent insolvency and protects market participants.
Context
The implementation of own funds requirements for digital asset entities is a central aspect of emerging regulatory frameworks globally. A key debate involves calibrating these requirements appropriately, considering the unique risk profiles of various crypto assets and business models. Future regulations are expected to refine these capital adequacy standards, potentially differentiating based on the type of digital asset activity and the level of systemic importance.
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