Pre-existing firms are companies that were already conducting business before new regulations or laws were introduced. In the context of digital asset regulation, this term refers to cryptocurrency businesses that were operational prior to the implementation of specific licensing requirements or comprehensive regulatory frameworks. These firms often face unique challenges in adapting to new compliance obligations, sometimes requiring transitional periods or specific grandfathering provisions. Their adaptation is crucial for maintaining market continuity and investor access.
Context
The treatment of pre-existing firms is a significant consideration in the legislative drafting of new digital asset regulations, such as MiCA in Europe. Regulators often discuss how to balance fair competition with the need to bring established entities into compliance without undue disruption. Ensuring a smooth transition for these firms is vital for the stability and continued growth of the regulated crypto market.
The UK's draft regime mandates that crypto exchanges and dealers adopt traditional finance standards for resilience and client protection, setting a clear divergence from MiCA.
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