Supervisory tools deficit refers to the inadequacy or absence of effective mechanisms and technologies available to regulatory bodies for monitoring, assessing, and enforcing compliance within a specific market. In the digital asset space, this deficit is pronounced due to the technical complexity, decentralization, and pseudonymous nature of many cryptocurrency operations. It hinders regulators’ ability to effectively oversee market activities, identify risks, and intervene when necessary. Addressing this deficit is crucial for effective market governance.
Context
The discussion around the supervisory tools deficit in crypto highlights the urgent need for regulators to acquire and develop more sophisticated analytical capabilities. A key debate involves leveraging artificial intelligence and blockchain analytics to gain better visibility into decentralized transactions and market behaviors. Future developments will likely focus on significant investment in regulatory technology solutions and enhanced data sharing agreements among international supervisory authorities to close this existing gap.
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