Definition ∞ Systemic Failure describes a widespread collapse or severe disruption across an entire financial system or market, rather than an isolated incident. In the digital asset context, this would involve the simultaneous failure of multiple interconnected protocols, exchanges, or stablecoins, leading to a loss of confidence and widespread financial distress. Such a failure could be triggered by a major security exploit, a large-scale liquidation event, or a significant regulatory crackdown. It poses a risk to market stability.
Context ∞ Systemic Failure is a major concern frequently discussed in news and by regulators when assessing the risks associated with the digital asset market. Events like the collapse of major centralized entities have highlighted the interconnectedness of the crypto economy and the potential for cascading effects. Efforts to prevent systemic failure often involve calls for greater transparency, robust risk management, and comprehensive regulatory oversight.
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