Compliance Cost

Definition ∞ Compliance cost refers to the expenses incurred by businesses and individuals to adhere to regulatory requirements and legal standards. These costs include expenditures on legal advice, technology solutions for reporting, internal training, and auditing processes. In the digital asset sector, compliance costs relate to anti-money laundering, know-your-customer, and financial reporting obligations. They represent the operational overhead associated with meeting statutory duties.
Context ∞ Compliance costs are a significant factor influencing the operational strategies and profitability of cryptocurrency exchanges and digital asset firms. Regulatory bodies globally are intensifying their scrutiny, leading to increased demands for robust compliance frameworks, which in turn elevates these costs. News frequently highlights how evolving regulations impact market participants, often discussing the balance between innovation and regulatory adherence.