Supervisory Mechanisms are established systems, procedures, and authorities designed to monitor, assess, and enforce compliance with regulations and standards. These frameworks provide oversight to ensure that entities operate within legal and ethical boundaries. Their objective is to protect market integrity, prevent systemic risks, and safeguard consumer interests. Effective mechanisms involve regular audits, reporting requirements, and intervention powers.
Context
News often highlights Supervisory Mechanisms in reports on financial regulation, particularly concerning digital asset markets. Regulators worldwide are working to establish robust oversight for cryptocurrency exchanges, stablecoin issuers, and other market participants. The ongoing development of these mechanisms aims to address the unique risks presented by decentralized finance.
CASPs must immediately integrate DORA's comprehensive ICT risk framework, shifting compliance from capital allocation to systemic operational resilience.
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