// GLOSSARY -- AGENTIC FINANCE

What is a Transaction Policy?

1 min read Updated

A transaction policy is a declarative rule set defining valid agent transactions — specifying allowed amounts, recipients, tokens, contract interactions, time windows, and velocity limits.

WHY IT MATTERS

Policies formalize what an agent is financially allowed to do. Instead of relying on prompt instructions (manipulable), they provide deterministic, verifiable constraints at the infrastructure level.

Good policies are declarative: "Allow USDC up to $500, to whitelisted addresses, max 10/hour." Readable, auditable, composable.

The art is balance — overly restrictive prevents work, overly permissive doesn't protect. Best policies are task-specific and adjust over time.

HOW POLICYLAYER USES THIS

PolicyLayer enables declarative transaction policies evaluated in real-time, definable through DSL or API, updatable without redeploying agents.

FREQUENTLY ASKED QUESTIONS

Can agents change policies?
No — fundamental security principle. Policies are set by operators. Self-modifying rules defeats the purpose.
How granular?
Very: per-token, per-recipient, time-of-day, gas price ceilings, and more. Multiple policies compose into comprehensive rulesets.
Different from smart contract guards?
Guards enforce on-chain post-submission. Policies evaluate pre-signing — faster feedback, richer rules. They're complementary.

FURTHER READING

Enforce policies on every tool call

Intercept is the open-source MCP proxy that enforces YAML policies on AI agent tool calls. No code changes needed.

npx -y @policylayer/intercept
github.com/policylayer/intercept →
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