Risk-based regulation is an approach where regulatory oversight and intervention are proportional to the identified risks associated with a particular activity, product, or entity. For digital assets, this means regulators focus resources on areas presenting the highest potential for harm, such as illicit finance or systemic instability. This method aims for efficient and adaptable regulatory frameworks. It prioritizes critical areas.
Context
News frequently discusses the adoption of risk-based regulation by authorities seeking to manage the evolving digital asset landscape. This approach allows regulators to address novel technologies without stifling innovation through overly broad rules. Debates often center on accurately assessing risks in a dynamic market and tailoring regulations effectively to specific digital asset activities.
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