Mandatory Licensing

Definition ∞ Mandatory Licensing refers to the legal requirement for businesses or individuals to obtain official authorization from a governing body before operating within a specific industry. This regulatory mechanism ensures that entities meet certain standards of conduct, financial stability, and operational integrity. It serves to protect consumers and maintain market order. Compliance is a prerequisite for legal operation.
Context ∞ In the digital asset sector, mandatory licensing is a growing area of regulatory focus, aimed at bringing cryptocurrency exchanges and service providers under established financial oversight. The current discussion centers on the scope of such licensing requirements and their impact on innovation versus consumer protection. Future developments will likely involve the establishment of more standardized and internationally recognized licensing frameworks for virtual asset service providers.