Definition ∞ Enforcement risk denotes the potential for legal or regulatory actions, such as fines, sanctions, or operational restrictions, imposed by authorities due to non-compliance with existing laws. This risk is particularly relevant in the rapidly evolving digital asset sector where regulatory clarity may be limited or inconsistent. Entities operating in this space face scrutiny regarding licensing, anti-money laundering (AML) adherence, and securities laws. Managing this risk requires careful attention to legal obligations and evolving policy landscapes.
Context ∞ Enforcement risk is a prevalent concern for cryptocurrency exchanges, decentralized finance (DeFi) protocols, and other digital asset businesses. The current situation involves increasing regulatory activity globally, leading to numerous actions against non-compliant firms. A critical future development involves the establishment of clearer regulatory frameworks, which could either mitigate or heighten enforcement risks depending on their scope and stringency.
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