Subrule · Chapter 1
cr:1.7.4b
An activated ability is functional if its cost can only be paid, or it explicitly specifies it can be activated, when the source is private or outside the arena, and the source meets that condition.[5.2.4]
Example: Mighty Windup has the text “Instant – Discard this: Create a Might token,” which is functional when it is in the owner’s hand because the cost can only be paid when Mighty Windup is in the owner’s hand.
Example: Guardian of the Shadowrealm has the text “Action – {r}{r}: Return this to your hand. Active this ability only while this card is in your banished zone,” which is functional when it is face-up in the owner’s banished zone.