Licensing Regime
The permission system a jurisdiction uses to decide which firms may hold customer assets or operate a trading or transfer service.
A licensing regime sets entry conditions such as minimum capital, fit-and-proper checks on management, custody and segregation standards, complaint handling, cybersecurity requirements, and periodic reporting. Examples include New York's BitLicense introduced in 2015, state money transmitter licenses across the United States, authorization as a crypto-asset service provider under MiCA, and payment or exchange licensing in Japan and Singapore. Because licenses are jurisdictional, the same firm may offer different products in different countries, which is the direct cause of geographic restrictions on exchange features. Where regimes conflict or lag, firms sometimes operate from jurisdictions with lighter requirements, and users bear the difference in protection.
En pratique
A firm licensed in one European Union member state under MiCA may passport that authorization to serve customers across the bloc without seeking a separate license in each country.
Le malentendu courant
That a license means a regulator has reviewed and approved the assets a firm lists, when licensing addresses the firm's conduct, controls, and solvency rather than the merits of anything it offers.