Glossary of digital asset and compliance terms

Regulatory language rewards precision. Words such as “registered,” “licensed” and “custody” carry different meanings in different jurisdictions, and a term that sounds reassuring in a marketing sentence may be doing very little legal work. This glossary fixes a working meaning for each term as it is used on this site. It is not a substitute for applicable statutory definitions.

AAnti-money laundering (AML)

The laws, regulations and internal procedures intended to prevent criminal proceeds from being disguised as legitimate funds. For platforms, an AML program typically includes customer due diligence, transaction monitoring, recordkeeping, escalation and reporting to the competent authority. See the compliance framework.

BBeneficial ownership

The natural persons who ultimately own or control a legal entity or arrangement, even when shares or rights are held through intermediaries. Beneficial-ownership disclosure rules are intended to make that layer visible to registries, banks and regulators.

CCorporate registration

Formation of a business entity under state or national company law. Registration creates a legal person, records its name and basic structure, and allows it to contract and hold property. It does not authorize regulated financial activity. See registration versus license.

CCounter-terrorist financing (CTF)

Measures intended to prevent and detect the raising, movement or use of funds for terrorist purposes. CTF obligations are usually administered alongside AML requirements and rely on similar identification, screening and reporting controls.

CCustody

The safekeeping of assets on behalf of a client. In digital assets, custody involves control of private keys and wallet infrastructure, and it is regulated in many jurisdictions as a financial service. Corporate registration does not imply custody authority. See activities that usually need authorization.

DDigital asset

A representation of value, rights or claims recorded and transferred using distributed-ledger technology. The category includes cryptocurrencies, stablecoins, tokenized instruments and other on-chain assets. Legal treatment depends on the asset’s characteristics and the jurisdiction.

DDue diligence

Investigation and verification undertaken before onboarding a customer, counterparty, vendor or asset. It is risk-based: the depth of checks should reflect the risk presented by the relationship, its size, its geography and its purpose. See customer identification.

EEmployer Identification Number (EIN)

A nine-digit identifier issued by the U.S. Internal Revenue Service for federal tax administration. An EIN identifies an entity for tax purposes; it is not a business license, a financial license or an endorsement. See what the EIN is, and is not.

FFinancial regulatory license

An authorization from a financial regulator permitting a defined entity to carry out defined activities, such as dealing, custody, payments or money transmission, in a defined jurisdiction and subject to conditions. A license in one market does not automatically apply in another. See the comparison table.

KKnow Your Customer (KYC)

The process of identifying a customer, verifying the information provided, screening the customer against relevant lists and assigning a risk profile that informs ongoing review. KYC is the foundation for monitoring and reporting controls. See the compliance framework.

SSanctions screening

Checking customers, counterparties and sometimes wallet addresses against sanctions lists issued by governments and international bodies. Screening aims to prevent dealings with prohibited persons, entities, sectors or jurisdictions and requires human review of potential matches. See sanctions screening.

SSegregation of duties

A control principle that divides incompatible responsibilities among different people — for example, separating the initiation of a payment from its approval, or system configuration from change review. It reduces the risk of error and single-person override. See multi-party approval.

SStablecoin

A digital asset designed to maintain a stable value relative to a reference asset, often a fiat currency, through reserve, collateral or algorithmic mechanisms. Stability is a design objective rather than a guarantee; reserve quality, redemption rights and regulatory treatment vary by issuer and jurisdiction.

TTokenization

Recording rights to a real-world asset or financial instrument as a digital token on a blockchain. Tokenization can affect settlement, transferability and market access, and it may change the legal characterization of the underlying right. It does not by itself remove legal or compliance obligations.

TTransaction monitoring

The ongoing review of transaction data for patterns that may indicate money laundering, fraud, sanctions evasion or other prohibited activity. Alerts are investigated and either closed with a documented rationale or escalated. See transaction monitoring.

TTravel Rule

A requirement in some AML regimes that certain transfers of virtual assets be accompanied by originator and beneficiary information passed between the institutions involved. The scope, thresholds and technical standards vary by jurisdiction.

Using defined terms precisely

Three habits prevent most misreadings. First, attach a jurisdiction to every regulatory term: a “license” means little without naming the authority and the market. Second, distinguish entity status from product permission: a company can be properly formed and still be unauthorized to offer custody or derivatives. Third, treat “compliance” as a set of operating controls rather than a label. The compliance framework and governance entries show how the terms connect in practice.

Definitions in this glossary reflect general usage in corporate, compliance and digital asset contexts. Where a statute or regulation defines a term differently, the legal definition governs. Nothing here is legal advice.

Updates and scope

The glossary is reviewed when the underlying articles change. The goal is a compact working vocabulary, not an exhaustive dictionary. Corrections can be directed through NPX Exchange Ltd corporate channels.