Systemic risk management involves identifying, assessing, and mitigating risks that could trigger a collapse of an entire financial system or market. This includes risks related to interconnectedness among institutions, market infrastructure failures, or widespread loss of confidence. The objective is to prevent cascading failures that could severely disrupt economic activity. Regulators implement measures to maintain overall financial stability.
Context
As digital asset markets grow and become more interconnected with traditional finance, systemic risk management for crypto is a growing concern for regulators worldwide. News often reports on discussions and proposals aimed at preventing large-scale disruptions stemming from crypto market volatility or the failure of major digital asset entities. Ensuring stability in the broader financial system is a key driver for increased crypto regulation.
Firms managing client digital assets must now integrate comprehensive AFSL compliance frameworks, fundamentally altering operational risk and capital requirements.
The stablecoin-native Plasma chain's $8B TVL launch validates the market demand for verticalized L1s that prioritize regulatory clarity and deep, capital-efficient liquidity.
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