Regulated Banking

Definition ∞ Regulated banking refers to financial institutions and their activities that operate under the strict oversight and rules established by governmental authorities and central banks. These regulations cover areas such as capital requirements, consumer protection, anti-money laundering protocols, and lending practices to ensure systemic stability and public trust. The framework aims to prevent financial crises, protect depositors, and maintain fair competition within the financial sector.
Context ∞ The integration of digital assets into regulated banking systems presents a significant area of focus, as institutions assess how to offer crypto services while adhering to existing compliance obligations. Discussions often involve the permissibility of holding digital assets on balance sheets, providing custody services, and facilitating crypto transactions under current banking laws. The ongoing challenge is adapting traditional regulatory principles to the novel characteristics of blockchain technology and decentralized finance without compromising financial safety.