Definition ∞ Policy simulation involves modeling the potential outcomes and impacts of various policy choices before their actual implementation. This analytical tool uses data and algorithms to forecast how different rules or regulations might affect a system, market, or group of participants. In digital assets, it can assess the effects of protocol changes or new regulatory stances. Simulation aids in informed decision-making.
Context ∞ In crypto news, policy simulation is often discussed in the context of decentralized governance, where communities might model the effects of proposed protocol upgrades before voting. Regulators may also use simulations to understand the potential market consequences of new digital asset laws. This analytical approach helps to mitigate risks and predict behavior in complex, dynamic environments.
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