Definition ∞ Financial Licensing denotes the mandatory regulatory approvals required for entities to conduct specific financial activities. These licenses are issued by governmental authorities to ensure compliance with laws concerning consumer protection, anti-money laundering, and market integrity. For digital asset businesses, obtaining such licenses is a prerequisite for operating legally, encompassing activities like exchange services, custody, or token issuance. The process verifies an entity’s operational soundness and adherence to regulatory standards.
Context ∞ Financial licensing remains a central and often contentious aspect of cryptocurrency regulation worldwide. Jurisdictions grapple with applying existing financial laws to novel digital asset business models, leading to varied and evolving licensing requirements. A key discussion involves achieving a regulatory framework that promotes innovation while mitigating risks associated with illicit activities and investor protection. Many crypto firms seek clarity and harmonization in global licensing standards to facilitate broader market participation.
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