If new entrants do not need to meet regulatory requirements, they can have substantially lower costs than the incumbents, allowing them to undercut them (for example, free text messaging).
This applies in all markets, such as Air BnB suppliers' avoidance of fire safety legislation that hotels have to meet (and zoning, traffic, etc).
Uber/Lyft's avoidance of taxi legislation, which is not necessarily about medallions. Some markets have licensing requirements which aren't applied to normal citizens (work hours and additional provision on license) [1].
Banking is a perfect example of this. You know those Visa cards that were offered by, say, Disney[2]? Offering a Visa card requires a banking license (which I understand is expensive and awkward), so they white-box an existing bank's cards (Chase does a lot of business here).
New entrants can be reasonably asked to meet the regulations. If they choose to not adhere to local legislation, it is perfectly reasonable to bar them from operating in a market.
There is a discussion on whether or not the requirement is sensible. That's for the locals to decide. With the passing of the UK's Investigatory Powers Act 2016 (Snooper's Charter), look for similar regulatory findings to start happening in the UK if there is significant pick-up of traffic on Signal.
[1] https://www.nzta.govt.nz/commercial-driving/taxis-shuttles-b...