- What Is an MSB License?
- What Is a VASP License?
- Key Differences Between MSB and VASP Licenses
- Compliance Requirements for MSB and VASP Licenses
- Jurisdictions for MSB and VASP Licenses
- Regulatory Environment for MSB and VASP Licenses
- Conclusion: Choosing the Right License for Your Business
- Frequently Asked Questions
As today’s financial landscape is rapidly changing and evolving, the market becomes more dynamic yet more demanding simultaneously. What does it mean for businesses that handle digital assets? Now, they must meet stringent regulatory requirements to operate lawfully and efficiently. Currently, there are two most important licensing options available to such companies: the Money Services Business (MSB) license and the Virtual Asset Service Provider (VASP) license. Each comes with its unique compliance framework and operational scope, and distinct advantages for your company.
Understanding the nuances between the two licensing types is crucial for any crypto or fintech venture that aims to build trust with its clients, scale globally, and, most importantly, stay compliant. Read further to learn more about the major differences between MSB and VASP licenses, their regulation frameworks, and jurisdictions where you can obtain them.
What Is an MSB License?
The main purpose of obtaining this permit is to ensure that companies maintain compliance with the relevant regulatory requirements, conduct thorough customer verification, and keep proper transaction reporting. With its compliance and licensing, a business provides greater transparency and security within the traditional market.
What Is a VASP License?
However, as you ponder, what is a VASP license and why is it important, be informed about the current transition procedure from the older term VASP to the new, more standardized and legally defined Crypto Asset Service Provider (CASP) across all member states of the European Union. This regulatory shift, which started in January 2025, is driven by the rollout of the EU markets in Crypto-Asset Regulation (MiCA), which officially uses the term CASP in reference to crypto businesses under a single, EU-wide framework. It means that if you are planning to launch a crypto venture in the EU, you will need to become a CASP, not a VASP.
The major purpose of transitioning from VASPs to CASPs is to provide more clarity and legal uniformity across the market by defining specific crypto-asset categories and services that were not previously defined by VASP regulations. Those mainly include stablecoins and utility tokens. The EU’s push to create an enforceable regulation framework for crypto aims to expand the Financial Action Task Force’s (FATF) ambiguous guidance and legal expectations across the region. Not to mention, in the non-EU countries, including Singapore, the UK, and the UAE, the term VASP will probably remain unchanged.
Key Differences Between MSB and VASP Licenses
Obtaining a proper license is crucial for offering financial services with all necessary safety, transparency, and clarity. To select the right option and begin your application process, make sure to carefully examine various nuances about each of the two types of permits. Here is a detailed MSB vs VASP license comparison to provide you with a better understanding of how each of these permits works:
| Characteristic / License | Money Services Business (MSB) in Canada | Crypto Asset Service Provider (CASP), previously known as VASP |
| Regulator | Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) | Regulators differ depending on the country, for example:
|
| Best for | Traditional financial services, including currency exchange, check cashing, money transmission, and remittances | Services related to virtual assets, including wallet providers, NFT trading, cryptocurrency exchange, and ICOs |
| Scope | Fiat currency activities (EUR, USD, etc.) | Virtual/digital currencies (stablecoins, Ethereum, Bitcoin, etc.) |
| Jurisdictions | Mostly with the USA | Global, including the EU, UAE, Hong Kong, Singapore, etc.. Yet, often applies country-specific VASP rules |
| Costs | Lower fees in certain states, except if full MTL is required, which is expensive | Often expensive, especially with capital-share requirements and audit obligations |
| AML / KYC obligations | Required | Required (is usually stricter due to the FATF Travel Rule compliance) |
Compliance Requirements for MSB and VASP Licenses
Navigating the regulations for MSB and VASP licenses is a crucial step for companies operating in today’s digital finance space. While both permits enable businesses to manage and transfer digital assets, the requirements for MSB and VASP licenses (now known as CASP) differ greatly depending on their operational scope, jurisdictions, compliance obligations, and other key aspects.
| Characteristic / License | Money Services Business (MSB) in Canada | Crypto Asset Service Provider (CASP), previously known as VASP |
| Registration and legal structure | Must be a properly incorporated entity within the US | Must be a properly incorporated entity; sometimes, local incorporation is mandatory (e.g., Dubai company for VARA) |
| Physical office space | Often required to have a physical office address in the US | Required to have a local office space in the licensing jurisdiction |
| Share capital | No formal federal minimum; however, several states require a net worth minimum, ranging from $100,000 to $1,000,000, depending on the state | Minimum paid-up capital is required and varies widely between $50,000 and $1,000,000, depending on the services and jurisdiction |
| Local director/representative | Sometimes required for state licensing | At least one local director or compliance officer resident is required in the jurisdiction |
| Business plan | Requires a basic business plan | Requires a full, detailed business plan, containing information about services, target customers, risk analysis, and governance structure |
| Financial statements | Requires basic financial records; sometimes, requires audited financials in certain states | Requires audited statements annually in most VASP frameworks |
| AML program | Required | Required |
| KYC obligations | Standard KYC | Strong KYC and enhanced due diligence for high-risk users (e.g., PEPs and high-volume traders) |
| Suspicious activity reporting | Must submit SARs (Suspicious Activity Reports) to FINCEN | Must submit STRs (Suspicious Transaction Reports) to the relevant local authority; the Counter-Terrorism Financing (CTF) framework is required |
| Transaction monitoring | Monitor fiat transactions for suspicious patterns | Continuous monitoring of crypto transactions (blockchain analysis is often required) |
| Travel rule | Not required under standard MSB rules | Mandatory for crypto transfers above the threshold (per FATF guidelines) |
| Fit and proper tests | Generally lighter; focus on management honesty | Required: thorough background checks for directors, shareholders, and executives |
| Cybersecurity requirements | General IT security is expected | Formal cybersecurity policies are mandatory (especially for custody services) |
| Consumer protection | Basic (varies among the states) | Strong requirements: fund segregation, risk disclosures, complaint mechanisms |
| Compliance cost | From moderate to high, especially when multi-state licensing is required | High costs, which include crypto compliance, insurance, audits, and Travel Rule solutions |
| Penalties for non-compliance | Fines, possible criminal charges, and registration cancellation | Heavy fines, criminal charges, license revocation, and potentially – blacksliding globally |
Jurisdictions for MSB and VASP Licenses
Whether you choose the MSB or CASP licensing for expanding your company’s service in today’s market, make sure to select the right jurisdiction as well. At Fintech Harbor Consulting LTD, we offer comprehensive legal support throughout the entire process of getting your permit.
From initial consultation and choosing the best jurisdiction to submitting your application, our expert team will make sure you get the most accurate, in-depth information about the regulatory and compliance requirements of your chosen jurisdiction. Below is a quick overview of some of the best jurisdictions where you can get your MSB or CASP permit to level up your business.
Canada
If you are seeking to get an MSB license in Canada, you’ll enormously benefit from this jurisdiction’s transparent regulatory system, stable economy, and a global reputation for its remarkable financial integrity. Here is what attracts international businesses and startups to Canadian MSB registration:
- You’ll enjoy a clear and generally hassle-free application and approval process if you apply for the permit in Canada. The entire document preparation generally takes no longer than one month to complete before you can submit your license application for review and approval.
- This jurisdiction does not require you to register a physical office space or appoint a local director in Canada, which makes this country an accessible destination for foreign entrepreneurs.
Before you apply, make sure to prepare a clear business plan, AML and CTF procedures, and find a compliance officer. Overall, its strict yet supportive regulatory approach makes Canada a favorable choice as you aim to build a trusted, long-term-oriented company.
Poland
Poland has already established its growing crypto ecosystem as a go-to destination for businesses within the EU. If you’re looking for both a reliable and efficient licensing jurisdiction, it is the one, and here is why:
- There is no physical office space required and you don’t ned to be a resident to register your company in this country.
- It takes just a few weeks to get your CASP, formerly referred to as VASP, license in Poland, plus the application process is fairly straightforward and business-friendly.
To successfully apply and obtain the permit in this jurisdiction, it’s significant that you meet its regulation standards. In particular, you’ll need to appoint a local representative for compliance purposes as well as a qualified AML officer, and implement CTF and AML procedures. Once you make sure regulatory requirements are fulfilled, it’s time to proceed with your application and target European markets with your venture services.
Czech Republic
The Czech Republic is indeed a rising star in today’s European crypto ecosystem, with its accessible and hassle-free path to becoming a licensed CASP. A combination of a flexible approach and a financially stable market makes this country an auspicious destination for obtaining your CASP permit.
- It takes approximately just a month to proceed with obtaining your permit, with no minimum capital requirement and no need for a physical office space.
- You don’t need to be a resident to be eligible for proper licensing.
- The application process is quite simple and involves the standard regulatory obligations. Namely, you’ll need to appoint a local representative for AML compliance and prepare clear internal policies that align with the AML program.
- With its location in the center of the EU, practical approach, and efficient procedure, the Czech Republic appears as a favorable hub for startups and crypto businesses seeking to extend their services to the European digital financial space.
Mauritius
- Due to its compliance with the international FATF guidelines, Mauritius remains a credible, global hub for crypto startups and already established fintech companies.
- The application process and regulatory requirements are transparent and consistent for your venture’s long-term growth. To get the licensing in this region, you’ll need to create CTF and AML policies, appoint at least two resident directors, incorporate a local company, prepare a detailed business plan, and develop strong cybersecurity rules.
- With a VASP permit in this jurisdiction, you’ll benefit from its clear legal system, supportive regulatory framework, and efficient tax policies.
Regulatory Environment for MSB and VASP Licenses
Depending on the licensing type you choose, know that each of them has its distinct regulatory framework that aims to ensure your venture’s lawful operations in the market. There are key things you need to know about the legal environment of MSB and CASP permits.
An MSB permit in jurisdictions like the US or Canada is known for its clear and well-established regulations. If you choose to proceed with getting the MSB permit, carefully examine the regulatory requirements that are specific to your selected jurisdiction.
- If you are registering your company in Canada or the US, for instance, you will need to do so through FINTRAC or FINCEN, respectively, and meet their compliance standards. Namely, to register your venture in Canada, your company has to implement a full AML and KYC program, report suspicious or large transactions, and keep a detailed record for the last five years.
- In the US, meanwhile, the MSBs must register with FINCEN at the federal level, and it’s often required to also possess an additional state-level license. Besides, in this country, you’ll need to implement an AML program and Suspicious Activity Reports (SARs). Overall, the key difference between the regulation in Canada and the US is that the former applies a unified national framework while the latter’s approach is fragmented due to the state-by-state licensing.
CASP’s (former VASP) regulatory requirements are currently undergoing significant changes towards clearer pathways for crypto businesses’ legal operation within the EU. Keep in mind that obligations differ among the jurisdictions and their regulation authorities.
- In countries like Poland or the Czech Republic, where crypto firms operate under the MiCA oversight, companies must register with local financial authorities and implement strict AML and CTF programs for better security and transparency in crypto activities.
- Meanwhile, in Mauritius, the licensing is regulated by the Financial Services Commission (FSC), which requires businesses to be incorporated locally, present a detailed business plan, and follow the enhanced KYC standards. Moreover, Mauritius still uses the legal term VASP, which aligns with international terminology.
- Nevertheless, across all CASP jurisdictions, companies must meet the KYC and Travel Rule standards, complete thorough blockchain analytics, and ensure traceability of their digital asset transfers.
Conclusion: Choosing the Right License for Your Business
Choosing the right licensing for your company ultimately depends on your customer base, operational goals, and risk appetite. Here are a few important factors to consider as you decide on the best permit for your venture:
- First, make sure to examine the operational scope and key purposes of each option. If you are leaning towards offering traditional financial services – currency exchange or money transfers – an MSB permit in a jurisdiction like Canada provides a well-established and stable regulatory framework. In contrast, the CASP permit, formerly known as VASP, is the best choice for businesses that are seeking long-term viability in the digital financial space. While the traditional MSB framework is more fiat-focused, the CASP permit caters directly to the compliance requirements of blockchain-based operations.
- Second, analyzing the MSB and VASP jurisdictions will also help you clarify which option suits your company best. On the one hand, the MSB licensing in Canada, for instance, is ideal for fiat money services thanks to its transparent and regulatory framework. On the other hand, the CASP model is the right choice for crypto businesses. Jurisdictions like the Czech Republic, Mauritius, or Poland support the CASP licensing framework with its straightforward registration process and crypto-friendly oversight.
- Third, MSB and VASP compliance differences are crucial to understanding what license is best for you. Namely, while both licenses require KYC and AML policies, MSBs generally follow standard KYC, monitor fiat transactions for suspicious patterns, and submit reports to FINCEN. Meanwhile, CASP licenses have their strict crypto-specific obligations, blockchain transaction monitoring, and enhanced due diligence for high-risk users. Also, MSBs have lighter policies for cybersecurity, while the CASP license requires more rigorous oversight over shareholders, directors, and executives, and requires stricter cybersecurity policies.
To conclude, the MSB licensing is a strong choice for companies that service customers in the traditional financial markets like Canada, where clear KYC and AML standards increase the scalability and credibility of operations. Choose MSB if your business is fiat-based and offers services like currency exchange, payment processing, or remittances.
Meanwhile, the CASP permit is purpose-built for companies dealing mainly with digital assets and providing services like crypto custody, wallet management, or token exchange. It makes a solid regulatory foundation for crypto–native startups operating in blockchain-specific compliance requirements and accessing the global markets.
Frequently Asked Questions
What is the process for obtaining an MSB license?
The process of getting your MSB license begins with determining your eligibility for the permit. In Canada, for instance, your business is eligible for licensing if it offers money transfers, currency exchange, deals with virtual currencies, or issues money orders, traveler’s cheques, etc. Not to mention, foreign ventures that service the customers in the jurisdictions also have to register as foreign MSBs. Then, proceed with registering your company in your selected jurisdiction (e.g., Canada or the US). At this step, your company will become a legal business in the jurisdiction where you aim to offer services.
Once a legal entity is formed, you will need to designate a compliance officer who will be responsible for regulatory matters. Also, you will have to ensure that key persons (e.g., directors and owners) meet the fit and proper criteria, which often include background checks and financial integrity. Next, create your company’s risk management and compliance procedures. In particular, it includes creating a written AML and KYC policy, risk assessment methodology, transactions reporting, staff training plan, and other compliance verification, according to your jurisdiction. Afterward, make sure to prepare required documentation, which typically includes a detailed business plan, your financial service description, corporate documents, proof of the physical office address, compliance documents, and financial statements or the documented evidence of the minimum capital, id required.
One of the final steps is submitting your documents and application through the relevant financial authority and paying the necessary registration and application fees. It’s followed by a thorough regulatory review of your documents and application. This step may also involve additional interviews with directors, clarification or update requests, and AML readiness checks. Once approved, your company will be added to the public registry of licensed MSBs, and you will officially get your licensing.
However, the process of obtaining your permit does not end here. Rather, it is significant that your company maintains ongoing compliance. It means that you will need to submit regular reports to verify that your venture is compliant with the relevant regulations. This might include sending transaction reports, audits, or compliance reviews. Also, certain jurisdictions require businesses to renew their licensing annually. Finally, it is important to stay updated on any regulatory changes in your operating region.
How do MSB and VASP licenses differ in terms of compliance?
One key step in applying for licensing – both MSB and CASP (formerly known as VASP) – is ensuring your company’s compliance with the current regulation requirements. While both types of permits require businesses to meet strict measures, they differ in their focus and regulatory expectations.
- MSB compliance typically centers on traditional financial activities, including money transfers, currency exchange, and remittances. Companies that hold this permit are expected to implement robust AML and CTF programs, KYC policies, monitor transactions for any suspicious activity, and report each large transaction. These obligations are overseen by the Financial Crimes Enforcement Network (FINCEN) within the US and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) in Canada.
- The CASP permit – in line with current terminology under the MiCA – is designed for companies that operate in the digital asset space. This permit is required for businesses that offer services in crypto exchange, custodial wallet providers, and token platforms. It aims to increase financial safety in light of the high risks associated with virtual assets. Compared to MSB, CASP compliance is generally more technologically strict yet more adaptive. It imposes advanced requirements on CASPs, including blockchain transaction analysis, strong cybersecurity protocols, verification of fund sources, and risk assessments. Applying for this licensing, companies must also implement an AML framework, a robust Counter-Terrorism Financing (CTF) policy, internal governance standards, and strong IT controls to ensure safety and transparency in clients’ financial activities.
Which countries require an MSB license vs a VASP license?
Countries that require an MSB license are the US, Canada, Australia, and Bahrain (for specific fiat services). Our company offers assistance for obtaining the proper MSB licensing for businesses in Canada. We will ensure that your venture is compliant under the FINTRAC framework.
In terms of the CASP permit, all member states in the European Union are required to obtain a CASP license (formerly known as VASP until June 2024) to operate lawfully under the MiCA regulation. We will help you get the proper permit in the best jurisdictions in the EU, including Switzerland, Estonia, Lithuania, Mauritius, plus Hong Kong, Dubai, Malta, Singapore, and the UK. Our expert team of lawyers will guide you through the process of getting proper licensing for your company, ensuring that your financial services remain transparent, secure, and compliant with the current regulatory obligations.
