Definition ∞ A regulated financial instrument is any asset or contract whose issuance, trading, and custody are subject to oversight by governmental or financial authorities. These instruments adhere to specific legal frameworks designed to protect investors, maintain market integrity, and prevent illicit activities. In the digital asset space, certain cryptocurrencies or tokenized assets may fall under this classification depending on their characteristics.
Context ∞ The classification of digital assets as regulated financial instruments is a central and contentious issue in global regulatory discussions. News often covers debates around the “Howey Test” and similar frameworks used to determine if a token constitutes a security. Regulatory clarity is critical for the mainstream adoption of digital assets and for ensuring investor protection in an evolving market.
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