Definition ∞ Regulatory shopping describes the practice where businesses strategically choose jurisdictions with less stringent or more favorable regulatory environments to establish their operations. In the digital asset sector, firms might seek countries with lenient licensing requirements or lower compliance costs for their cryptocurrency exchanges or token offerings. This behavior can lead to a race to the bottom in regulatory standards, potentially increasing risks for consumers and market integrity. It often exploits differences in international legal frameworks.
Context ∞ The phenomenon of regulatory shopping is a significant concern for international financial regulators aiming to establish a consistent and robust framework for digital assets. Discussions often highlight the need for global cooperation and harmonization of rules to prevent firms from evading oversight. Future efforts will likely focus on developing common standards and information-sharing agreements among jurisdictions to create a more level and secure global digital asset market.
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