Definition ∞ Financial intermediaries are institutions that act as go-betweens for two parties in a financial transaction. These entities, such as banks, brokers, and exchanges, facilitate the flow of funds between savers and borrowers or buyers and sellers. They provide services like payment processing, lending, and asset custody, often performing regulatory compliance functions. In traditional finance, they are central to market operations and risk management.
Context ∞ The role of financial intermediaries is a key point of contrast and debate in the digital asset world, often highlighted in news comparing traditional finance with decentralized finance (DeFi). While blockchain technology aims to disintermediate many financial services, existing intermediaries are also exploring ways to integrate digital assets into their offerings. Regulatory discussions frequently center on how to apply existing frameworks to these entities as they interact with novel digital asset markets.
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