An Azure service that is used to provision Windows and Linux virtual machines.
In my opinion, it's not violating policy if SQL VM Provider is not registered.
As per the document, it looks like if you have self-installed SQL in Azure VM it's good to have SQL VM provider registered as it provides added feature benefits in administration - sql-vm-resource-provider-register
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If the response helped, do "Accept Answer" and upvote it -- Vaibhav