Bank Regulation

Definition ∞ Bank regulation involves governmental rules and oversight applied to financial institutions. These rules aim to maintain financial stability, protect consumers, and prevent illicit activities within the traditional banking system. Regulatory bodies establish capital requirements, operational standards, and compliance mandates. Such frameworks are designed to mitigate systemic risk and ensure sound financial practices.
Context ∞ The current state of bank regulation regarding digital assets is characterized by cautious adaptation and ongoing policy development. A key debate centers on how existing regulatory structures can effectively oversee novel decentralized financial products without stifling innovation. Future developments will likely involve the integration of digital asset supervision into broader financial stability protocols and enhanced collaboration among global regulators.