Definition ∞ On-site inspections involve physical visits by regulatory authorities or auditors to a business’s premises to assess its operations, internal controls, and compliance with applicable laws. These inspections verify the accuracy of reported information and ensure adherence to security protocols, risk management practices, and operational standards. They serve as a critical tool for oversight and enforcement. The process helps maintain market integrity and investor confidence.
Context ∞ In the digital asset sector, on-site inspections are becoming an increasingly relevant tool for regulators, particularly for licensed crypto-asset service providers and custodians. These inspections help verify the security of private keys, the integrity of technological infrastructure, and compliance with anti-money laundering requirements. A key discussion point involves adapting traditional inspection methodologies to the unique technical and operational models of blockchain businesses. Future regulatory frameworks will likely mandate more rigorous on-site verification to mitigate risks in the rapidly evolving digital asset landscape.
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