Definition ∞ On-site inspection involves a physical visit and direct examination of premises, operations, or assets by a regulatory body, auditor, or authorized party. This process verifies compliance with rules, assesses operational integrity, or confirms the existence and condition of collateral. It serves as a crucial due diligence mechanism in traditional finance and regulated industries. Such inspections provide direct verification.
Context ∞ In the digital asset space, discussions around on-site inspection often arise in the context of stablecoins and other asset-backed tokens where real-world reserves are claimed. Regulators are considering how to adapt traditional audit practices to verify off-chain collateral that underpins digital assets. Future debates will likely center on the frequency, scope, and independent nature of such inspections to build confidence in the backing of various digital currencies.
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