Definition ∞ SCA regulation refers to Strong Customer Authentication rules designed to enhance the security of electronic payments and transactions. These regulations, primarily under the European Union’s Revised Payment Services Directive (PSD2), require financial service providers to implement multi-factor authentication for most online transactions. This involves using at least two independent elements from categories such as knowledge, possession, or inherence to verify a user’s identity. The objective is to reduce fraud and protect consumers within the digital financial ecosystem.
Context ∞ SCA regulation is a significant point of discussion for cryptocurrency exchanges and payment providers operating within jurisdictions that enforce such rules. Compliance requires substantial technical adjustments to ensure seamless user experience while meeting stringent security mandates. The implementation of SCA aims to bring digital asset transactions closer to the security standards of traditional finance, addressing concerns about fraud and consumer protection.
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