Customer protection refers to measures and regulations designed to safeguard individuals utilizing financial services or products from fraud, malpractice, or systemic risks. In the digital asset space, this pertains to protocols and legal frameworks that protect users interacting with exchanges, lending platforms, or other decentralized applications. It aims to ensure fair treatment and secure asset handling for participants.
Context
Customer protection is a paramount concern for regulators assessing the digital asset market, with current frameworks often viewed as insufficient given the novel risks involved. Key discussions revolve around asset segregation, cybersecurity standards for custodians, and transparent disclosure requirements for decentralized finance protocols. The absence of comprehensive protections continues to hinder broader institutional and retail adoption.
The new willful intent standard fundamentally re-calibrates compliance risk, shifting the enforcement focus from technical registration to demonstrable fraud and market abuse.
The proposed intermediary classification would fundamentally re-architect DeFi, mandating KYC/AML and broker-level compliance for nearly all US-facing protocols.
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