Definition ∞ Prudential treatment refers to regulatory measures applied to financial institutions to ensure their safety and soundness. These rules typically involve capital requirements, risk management standards, and governance guidelines. The purpose is to protect depositors and maintain overall financial stability.
Context ∞ In the context of digital assets, prudential treatment is a critical area of focus for banking regulators. Discussions in crypto news often center on how banks holding cryptocurrencies should be treated, specifically concerning capital charges and risk weighting. The goal is to mitigate potential risks that digital assets might pose to the banking sector and broader financial system.
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