Definition ∞ Broker Dealers are financial firms or individuals that execute securities transactions on behalf of clients and also trade for their own accounts. When acting as a broker, they facilitate transactions between buyers and sellers, earning commissions. When acting as a dealer, they trade from their own inventory, profiting from the bid-ask spread. These entities are subject to extensive regulatory oversight within traditional financial markets.
Context ∞ The role of Broker Dealers is evolving within the digital asset space as regulatory bodies consider how existing financial frameworks apply to cryptocurrencies and tokenized securities. There is ongoing debate and legislative effort to determine if and how crypto exchanges and other digital asset platforms should register and operate as Broker Dealers. This classification would subject them to stringent capital requirements, investor protection rules, and anti-money laundering obligations, significantly impacting market structure.
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