Financial services licensing is the process by which individuals or entities obtain official permission from a regulatory authority to provide specific financial products or services. This authorization ensures that providers meet certain capital, conduct, and operational standards. It is a critical component of consumer protection and market integrity. Without a proper license, offering such services is illegal.
Context
In the digital asset space, financial services licensing is a significant point of contention and regulatory focus, as many crypto businesses currently operate without explicit licenses. A key discussion involves extending existing licensing frameworks to cover digital asset activities or creating new, bespoke licenses. Future developments will likely see a global trend towards stricter licensing requirements for cryptocurrency exchanges, custodians, and other service providers, aiming to bring greater oversight to the sector.
Australia's Draft Bill mandates an AFSL for all custodial digital asset platforms, fundamentally restructuring compliance obligations for market access.
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