Liquidation compliance refers to the protocols and requirements involved when a cryptocurrency asset is forcibly sold to cover losses in a trading position. This typically occurs when an investor’s margin account falls below the required maintenance level due to adverse price movements.When a trader uses leverage, they borrow funds to increase their investment potential. If the asset’s value drops significantly, the trading platform may initiate a liquidation process to protect itself from further losses. Liquidation compliance ensures that these actions align with regulatory standards and internal policies.Different platforms have varying rules concerning liquidation, including how much margin is needed and the timing of sales. Compliance also involves ensuring that the liquidation process is transparent and fair, with adequate risk warnings provided to traders.In essence, liquidation compliance protects both the trading platform and the investor by ensuring that liquidations are handled according to established guidelines. This helps maintain market stability and confidence among participants.