One of the key trends in the modern market is the establishment and development of cryptocurrency exchanges for trading virtual currencies. Today, there is no universal legal framework for dealing with virtual money. Therefore, some countries try to adapt to the rapidly changing industry by forming regulatory frameworks for virtual currencies. Meanwhile, other jurisdictions choose to tighten their measures of regulating the activities related to digital currencies and their mining.
There are two global definitions of subjects that offer services related to digital assets – Crypto Asset Service Providers (CASP) and Virtual Asset Service Providers (VASP). These two subjects play the role of intermediaries between individuals or businesses and cryptocurrencies and offer platforms for managing, safekeeping, trading, and securing digital currencies.
This article will introduce you to the key differences between these two, their regulatory requirements, and CASP and VASP compliance, and guide you through the process of obtaining each of these two types of licensing.
What are CASP and VASP Licenses
It’s important to understand the main characteristics of each of the two licensing types before you obtain any of them. So, what is a CASP? Crypto Asset Service Provider (CASP) is an entity that provides services related to digital assets and is common only within the European Union. The term CASP first appeared in the draft Markets in Crypto Assets (MiCA) in 2020. Before that, entities that interacted with cryptocurrencies in the EU were also called VASPs, as they were all over the world.
This license will allow you to lawfully provide your crypto services within the EU and, as a result, open up new prospects for expanding your business on the global market. The examples of CASPs that you have probablyalready encountered are Binance and Coinbase.
Under MiCA’s global legislation, this entity represents companies and organizations that facilitate services related to digital assets. Those activities include:
- handling and safekeeping digital assets on behalf of third parties;
- operating trading platforms for crypto assets;
- exchanging crypto assets for other crypto assets;
- providing crypto asset advice;
- and the placement of crypto assets.
Another entity shares a few similar characteristics with CASP and yet differs in its scope, regulatory framework, and the range of assets it handles. You might ponder, what is a VASP? Compared to CASP, Virtual Asset Service Provider (VASP) encompasses a larger variety of digital assets, including non-crypto tokens, and operates on a global level by international standards. The term was first introduced by the Financial Action Task Force (FATF), which established guidelines to manage an extensive number of digital assets and other value forms. Formed in 1989, this intergovernmental organization promotes effective measures to reduce money laundering and terrorist financing as well as other threats to the integrity of global financial systems.
This licensing will help you expand your business globally and carry out crypto services between various forms of virtual currencies. One of the examples of VASPs is Tokenized Asset Platforms that trade digital assets representing real-world commodities and financial products.
According to FATF’s, VASPs present businesses involved in the following activities:
- exchanges between virtual assets and fiat currencies;
- exchange of virtual assets among one or multiple forms of assets;
- transferring virtual assets;
- custody and administration of virtual assets;
- carrying out financial services that include offering virtual assets by their issuers.
Key Differences Between CASP and VASP Licenses
Both entities are significant to the development of blockchain technology and the overall growth of the digital asset ecosystem. The main thing is that CASP and VASP differ in the jurisdiction of application:
- CASP is a term suggested by the MiCA and is used only within the European Union.
- VASP is a more widely used term that is used in other countries around the world in accordance with the FATF recommendations.
Both concepts refer to service providers with virtual/crypto assets, but are regulated by different legal frameworks. Therefore, these two entities differ in their scope of application, regulatory bodies, and licensing requirements.
Scope and Application
The key difference between CASP and VASP licenses is related to their scope of usage and regulatory specificity. Namely, VASP operates globally, according to international standards. In contrast, within the EU region, only CASP is applicable. Besides, compared to VASP, CASP offers a more detailed list of regulation services, including providing crypto asset advice and operating a trading platform. Also, CASPs focus on cryptocurrencies like Bitcoin or Ethereum, whereas VASPs encompass a broader range of digital assets, including non-cryptocurrency tokens besides cryptocurrencies.
Regulatory Bodies and Jurisdictions
CASP, as mentioned earlier, operates under MiCA and aims to create a unified, effective legal framework for the management of virtual assets and cryptocurrencies in the European Union (EU). This entity regulates and oversees the crypto market in the EU region and enforces Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) rules. The major goal of CASP under MiCA is to oversee the companies to make sure their digital-asset-related services offered to European citizens meet the CASP standards. This regulation also takes into account the future markets, protecting the crypto ecosystem from potential exemptions of loopholes.
In contrast, VASP is common on the global scale and is not limited to the European Union. It is defined by the FATF, which expanded the range of guidelines to include digital assets along with tokens representing securities, commodities, and other value forms. To ensure transparency and safety in the existing crypto landscape, licensed VASPs have to meet the precise AML and CTF standards. This strong licensing framework also aims to improve the industry’s growth by prioritizing customers’ safety and ethical business practices.
License Validity and Renewal
According to the new regulation accepted in January 2025, the current VASPs need to align their operations with the MiCA regulations and obtain the CASP licensing. This change within the new MiCA provides unified EU-wide requirements for crypto businesses. The transition to the new framework is expected to be rather complex due to the limited transition period, which varies depending on the asset type. For instance, a VASP that does not proceed with its new CASP licensing application within the established transition time limit will lose its current license within six months.
For a more effective CASP and VASP comparison, take a glance at the table below:
Criteria | CASP (Crypto Asset Service Provider) | VASP (Virtual Asset Service Provider) |
Regulatory Bodies | MiCA (Markets in Crypto-Assets Regulation) | FATF (Financial Action Task Force) |
Date of Introduction | 2020 | 2019 |
Regulatory Region | European Union only | Globally (international standards) |
Key Activities | Exchange, storage, management, and placement of crypto assets; providing advice on crypto assets; accepting and transmitting orders for crypto assets on behalf of third parties. | Exchange of fiat currencies, virtual assets, and between different forms of them; transfer, storage, and administration of virtual assets; provision of financial services that are related to the sale or offer of virtual assets by the issuer |
Scope of Application | Individuals and legal entities that professionally provide services related to crypto asset activities to external clients | Persons and businesses engaged in the activities mentioned above |
Objectives | Creation of the unified legal framework for crypto asset management within the EU, CFT, and AML | Terrorist Financing (CFT) and Combating Money Laundering (AML) |
Assets Handled | Cryptocurrencies, asset-backed tokens, and tokenized securities | Primarily cryptocurrencies (Ethereum, Bitcoin, etc.) |
Compliance Requirements | Must comply with global financial regulations, too; however, the regulatory focus is subject to change due to the asset type. | Must comply with such global financial regulations as Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols |
Compliance and Regulatory Requirements
In order to receive one of the two types of licensing, make sure to comply with specific regulatory obligations that vary across jurisdictions. Here is the breakdown of VASP vs CASP regulations and compliance requirements you need to know.
Compliance for CASP License
It’s important to learn about the legal and regulatory requirements your crypto business has to follow to operate lawfully in the current crypto ecosystem. The CASP licensing under MiCA gives you lawful permission to operate your crypto business all across the European Union. Moreover, under MiCA, businesses that currently belong to the VASP category will be reclassified as CASPs. Thus, the VASP ventures need to obtain the new licensing to be able to continue operating legally in the region. The new regulation requirements are generally stricter for CASPs operating within the EU than they are for VASPs.
This new regulation was established on January 1st, 2025, which claims that all existing VASPs must apply for and obtain their MiCA CASP license. The rule applies not only to the current VASP license holders but also to the new crypto businesses who are planning to operate in the EU and companies that provide crypto-asset services.
Furthermore, share capital class requirements differ depending on the type of CASP activities. You can choose from the following types of CASP licenses that mainly differ only in their minimum capital requirements:
- For the Class 1 CASP, the minimum capital must be €50,000 for the company that aims to offer any crypto-asset services. Those include the placement of tokens, providing advice on them, as well as the transmission and reception of orders on behalf of third parties. It also applies to services of orders execution for third parties.
- Class 2 CASP licensing requires €125,000 capital for the same services mentioned earlier, plus the exchange of tokens for other crypto-assets or fiat currency.
- Class 3 CASP requires €150,000 capital. This type of license applies to all services mentioned earlier in the Class 2. Besides, the Class 3 licensings covers custody and administration of assets on behalf of third parties.
Compliance for VASP License
To obtain VASP licensing, your business must meet the standards set by the FATF. One of the major elements of compliance is aligning with the AML and CFT policies. As part of the license application process, your business must prioritize AML and CFT compliance and craft a comprehensive procedure and policy for crypto to retain this type of license. However, there are many individual requirements depending on the country where you will be obtaining the VASP authorisation.
Since the second half of 2024, the MiCA regulation has significantly impacted crypto licensing in the EU. In particular, each virtual currency service provider in any of the EU states has to undergo the licensing process under the MiCA regulation. Ensuring your compliance with MiCA requirements will foster and protect your cross-border crypto activities. Of course, if you are authorised as a VASP outside the EU, you do not need to go through this procedure.
Pros and Cons of CASP and VASP Licenses
While the two licensing types share similar characteristics in terms of the activities they manage and the purpose of their operations in the crypto market, each of them has its strengths and weaknesses. To help you choose the right licensing, evaluate the pros and cons of CASP vs VASP license options.
CASP License Pros and Cons
Advantages of CASP:
- Provides advice on crypto-assets and offers portfolio management services;
- Have a clear regulatory framework that is specific to cryptocurrencies and aims to provide an effectively structured environment for investors;
- Centers on a specific, well-defined token class – cryptocurrencies – which makes it easier for users to manage.
Disadvantages:
- Is limited to cryptocurrencies only. It restricts the business’s potential access to more global crypto markets;
- The legal status of cryptocurrencies remains unclear in certain jurisdictions, despite the current regulatory process.
VASP License Pros and Cons
Advantages of VASP:
- Serves a broader market, compared to CASP, and, therefore, offers more opportunity for diversification;
- Follows transparent and clear regulations associated with anti-money laundering (AML) and counter-terrorism financing (CTF);
- Provides more opportunities to adapt to the future trends in the constantly changing crypto space, like tokenized commodities.
Disadvantages:
- Is more complex because managing a larger variety of assets requires navigating more complex regulatory environments;
- There is a risk of implementing excessive regulatory oversight that could potentially hinder innovation. This risk of overregulation is due to the diversity of cryptocurrencies involved.
How to Apply for a CASP or VASP License
Whether you are a fintech entrepreneur or a crypto enthusiast planning to open a crypto business, obtaining the right license is key for operating legally. The process of obtaining either of the types of licensing is complicated and requires compliance with strict regulatory obligations. Read below to learn more about the specifications of the application process for each licensing.
Application Process for CASP License
It is essential to meet all the CASP license requirements as you are planning to open a crypto business or secure the existing one. Not to mention, the process of receiving this type of licensing might vary depending on the jurisdiction, even though it presents a regulated and structured path. To receive your CASP license as smoothly and hassle-free as possible, follow the guideline that consists of these key steps:
- First, you need to identify the regulatory authority that issues a CASP license in your business’s target jurisdiction. Keep in mind that under MiCA, each member state within the EU has its specific national competent authority (NCA).
- Next, you will have to incorporate your company in your chosen jurisdiction. This stage involves registering a legal entity, establishing a physical office space in the country, and meeting other legal requirements.
- According to the type of crypto services (custody, advice, exchange, etc.), you must meet a certain minimum authorized capital threshold, which typically varies between €50,000 and €150,000.
- Next, you will need to proceed with your documentation and preparation, according to the MiCA requirements. Your business plan, website, IT infrastructure, AML/CFT policies, internal control systems, and proper documentation will be carefully assessed. The purpose of this stage is to identify the necessary improvements for your MiCA licensing through the comprehensive legal report.
- The next step is completing the application. It includes most of the information provided on the previous documentation stage. You will have to fill out the application form, pay the corresponding application fee, and upload all supporting documents.
- If the regulator is satisfied, your license will be formally issued. The estimated duration of the entire licence application process is up to nine months in most EU countries.
Application Process for VASP License
Make sure to meet the necessary VASP license requirements before you begin completing your application. Here are the practical steps for you to follow in the process:
- First, decide on the regulatory authority responsible for overseeing the services and choose the country where the VASP will be based. Keep in mind that each authority applies its own criteria and nuances in the licensing process.
- Next, you will have to legally incorporate your business in the jurisdiction where you are applying for licensing. This process includes choosing a specific legal entity type, registering your company with the national registrar, opening a local bank account (if required), and appointing your key management personnel.
- The third step is preparing your required documentation. The package of documents includes the detailed business plan, AML/CFT framework, corporate governance details, cybersecurity and risk management policies, and other personal documentation.
- Once all your documents are ready, you can apply along with the documentation to the relevant financial institution.
- The regulator will carefully examine your application in detail. This process can take up to several months, depending on the complexity of your jurisdiction as well as the regulatory workload.
- Finally, if the application is approved, your VASP license will be issued. The whole licensing obtaining process takes approximately four to nine months in most cases.
Conclusion: Which License Fits Your Needs?
Choosing the right licensing for your business will authorize your company to offer services in crypto exchange, storage, wallet providers, and numerous other service possibilities. Choose the CASP license if your business centers on crypto services like custody, trading, and wallet management, and if your company primarily handles cryptocurrencies like Ethereum or Bitcoin. However, VASP would be the best option if your company encompasses digital assets besides cryptocurrency and includes asset-backed tokens and tokenized securities.
Our expert team at Fintech Harbor Consulting LTD will provide you with full support in choosing and applying for the best type of license for your business and making sure you navigate each step safely and with confidence. The process of crypto licensing application requires the most careful attention to detail and excellent adherence to regulatory requirements. We will assist you in the hassle-free, safe, and secure process of obtaining the right CASP or VASP license in Poland, Spain, Switzerland, Portugal, Lithuania, and other prominent countries in the global crypto landscape.
Frequently Asked Questions
What are the main regulatory differences between CASP and VASP licenses?
The main difference between these two types of licensing lies in their regulatory scope. In particular, CASPs offer services related only to cryptocurrencies, including Ethereum and Bitcoin. On the other hand, VASPs specialize in a broader range of cryptocurrencies along with tokens representing securities and commodities. Also, CASP operates exclusively in the EU, while VASP has a global scope according to international standards. Yet, keep in mind that the use of these two types of licenses may vary by specific regulatory framework and jurisdiction.
How do compliance requirements vary for CASP and VASP licenses?
To receive a CASP license, compliance with MiCA regulations within the European Union is required. In contrast, to obtain your VASP licensing, you must comply with the FATF requirements.
Can a fintech company hold both CASP and VASP licenses?
If a fintech operates in more than one region, it may require both licenses. For example, if your company offers crypto exchange and custody in Cyprus as well as Dubai, you will need to obtain a CASP license from the Cyprus Securities and Exchange Commission (CySEC) and a VASP license from the Virtual Assets Regulatory Authority (VARA) or the Dubai Financial Services Authority (DFSA).
Another instance where you might need both types of licenses is when a fintech needs to apply in each jurisdiction separately and possibly structure the company differently in each of them. Besides, certain countries may use both terms – CASP and VASP – interchangeably as their national regulator recognizes both of them, so that a single license could meet the requirements of both entities. And still, the vast majority of jurisdictions differentiate between the two types of licenses.
Yet, it’s important to remember that the MiCA definition of CASP is broader than the definition of VASP by the FATF, as it includes additional elements. However, in informal contexts, these terms are often used interchangeably because a vast majority of services like crypto exchange, brokerage, custody, and transfer fall under both of these definitions. They mainly differ only in their legal frameworks.
