Definition ∞ Reserve Asset Segregation is the practice of keeping customer funds or stablecoin backing assets separate from an operating entity’s own assets. This ensures that in the event of bankruptcy or insolvency, customer assets are protected and cannot be used to satisfy the entity’s creditors. It is a fundamental principle of financial safekeeping and consumer protection. This separation maintains asset integrity and trust.
Context ∞ The current state of reserve asset segregation is a highly scrutinized topic in the digital asset space, particularly for centralized exchanges and stablecoin issuers. News frequently reports on calls from regulators and consumer advocates for stricter enforcement and transparency regarding how customer assets are held. A critical future development involves mandatory, independently verifiable proof of reserve asset segregation, potentially leveraging blockchain technology for on-chain attestations, to enhance trust and mitigate risks for digital asset holders.
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