Regulatory Differentiation

Definition ∞ Regulatory differentiation involves tailoring rules and oversight approaches based on the specific characteristics, risks, or scale of different entities or activities within a sector. This strategy acknowledges that a one-size-fits-all regulatory framework may not be appropriate, allowing for more proportionate and effective governance. It aims to avoid stifling innovation while still addressing potential harms by applying suitable levels of scrutiny. This approach recognizes market diversity.
Context ∞ Regulatory differentiation is a key discussion point in crypto news, as authorities grapple with how to regulate diverse digital assets and blockchain applications. Debates center on whether stablecoins, utility tokens, and security tokens should be subject to different regulatory regimes based on their economic function and risk profiles. News reports frequently cover proposals for nuanced frameworks that distinguish between various crypto assets and their associated service providers.