Definition ∞ A financial entity is an organization that engages in financial transactions, such as banking, lending, investing, or providing payment services. These entities operate within regulated frameworks and are typically subject to oversight by governmental authorities. Their primary function involves facilitating the flow of capital and managing financial risk for individuals, businesses, and governments. Examples include banks, credit unions, and investment funds.
Context ∞ In crypto news, the definition and regulation of “financial entity” are critical as it determines which traditional rules apply to crypto businesses. Debates arise over whether cryptocurrency exchanges, decentralized autonomous organizations (DAOs), or stablecoin issuers should be classified as financial entities. Regulatory bodies worldwide are striving to define the scope of these terms to ensure appropriate oversight and consumer protection within the digital asset market.
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