Regulatory Grandfathering

Definition ∞ Regulatory grandfathering is a provision in new laws or regulations that exempts existing entities, activities, or products from certain new requirements. This means that those already operating under previous rules are allowed to continue without immediately conforming to the updated standards. It provides a transition period or permanent exemption. This mechanism helps manage compliance changes. It exempts existing entities from new rules.
Context ∞ For the digital asset industry, regulatory grandfathering is a critical consideration when new frameworks like MiCA are introduced, as it determines how existing crypto businesses will adapt. Discussions often focus on whether established firms will receive exemptions or extended timelines to meet new licensing, operational, or capital requirements. This aspect significantly impacts market stability and competition. This affects crypto market transitions.