Financial market supervision involves the oversight and regulation of financial institutions and markets by governmental authorities to ensure stability and consumer protection. This regulatory function aims to maintain fair, transparent, and efficient financial systems by monitoring compliance with rules, preventing illicit activities, and addressing systemic risks. Supervisors establish frameworks for licensing, capital requirements, conduct of business, and anti-money laundering measures across various financial sectors. The objective is to safeguard market integrity and foster public confidence in financial services.
Context
The expansion of financial market supervision to include digital assets is a prominent global regulatory challenge, as authorities seek to apply existing principles to novel technologies. Debates often concern the appropriate classification of crypto assets, the jurisdictional reach of regulators, and the development of tailored rules for decentralized finance. Future efforts involve international cooperation to establish consistent regulatory standards and address cross-border risks in the evolving digital asset landscape.
European CASPs must now implement harmonized, risk-based surveillance systems to detect and prevent insider trading and market manipulation under MiCA.
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