Due diligence is the process of performing an investigation or audit of a potential investment or business. It involves a thorough examination of financial records, legal obligations, and operational risks. In the digital asset sphere, this entails scrutinizing smart contracts, tokenomics, and the background of project teams before committing capital or engaging with a platform.
Context
The importance of due diligence in the crypto market is a recurring theme, particularly following instances of project failures or exploits. Discussions often highlight the necessity for investors and users to rigorously assess the viability and security of digital assets and protocols. News cycles frequently report on the consequences of inadequate due diligence, underscoring its critical role in risk mitigation within this nascent industry.
The EU's new AMLR mandates strict prohibitions on privacy-preserving tokens and anonymous accounts, compelling CASPs to overhaul compliance frameworks by 2027.
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