Obtaining a VASP Crypto License

Every year the number of crypto businessmen is steadily growing due to the constantly moving progress. Companies that start working with cryptocurrencies operate in a wide segment - these are both large enterprises and startups in the field of IT technologies. But one way or another, the frequency of cryptocurrency exchange increases. However, sooner or later, the company inevitably approaches an important stage - obtaining a license to conduct its business. Is it necessary? And if necessary, what type and where to get it? We have the answer to these questions. Moreover, our Law & Trust specialists provide full support in obtaining a permit.
Table of contents:

Who needs a crypto license?

VASP crypto license is required for cryptocurrency exchanges and wallets, and any business that helps realize cryptocurrency turnover as a means of payment.
Companies engaged in the exchange, storage and management of crypto assets, as well as the transfer of funds in cryptocurrency, are required to obtain licenses to carry out crypto activities.
If we consider the issue of obtaining a crypto license for business, it is important to determine the company's activities before doing so. Thus, many companies use cryptocurrency as part of an exchange, and the laws of the country generally allow such actions. A license is not required here. If the company provides services related to blockchain, it will need permission. The choice of the country in which the company operates is also important.
If a company is constantly engaged in crypto activities, it must take into account legal requirements. A situation may arise when a company will need several licenses in different jurisdictions. For example, if the country is part of the EU, then a license from the country where the clients are located will be required.

VASP license: what is it?

A VASP (Virtual Asset Service Provider) is an organization or company that provides services related to virtual assets, such as cryptocurrencies. Examples of such services include cryptocurrency exchange, digital asset storage (custodian service), wallet management, and blockchain transactions.
A VASP license is necessary for the legal operation of companies providing these services. It confirms the organizations' compliance with the legal requirements of the country where it operates. These requirements may vary from country to country, but they usually concern security issues, consumer protection, anti-money laundering (AML) and combating the financing of terrorism (CFT).
Obtaining a VASP license allows a company to conduct business within the legal framework, ensuring the trust of customers and partners.

What activities does a VASP license include

VASP license is mandatory for companies planning to offer their clients the following cryptocurrency services:

Services for storage and transfer of crypto assets.
Exchange cryptocurrency to fiat money and vice versa.

As a rule, the activities of companies that provide services in the field of virtual assets are regulated by a Virtual Asset Service Provider (VASP) license. Sometimes Can meet other designations - Digital Asset Service Provider (DASP) or Crypto Asset Service Provider (CASP).

VASP regulations

In general, all these regulatory regimes are similar, united by the VASP Guidance, which was published by the FATF in 2019. It provides the following definitions:

Virtual asset – a representation of value for sale or virtual transfer that can be used for payment or investment purposes.
Virtual Asset Service Provider – a natural or legal person who, on a commercial basis, carries out such activities as the exchange of assets, the transfer of virtual assets on behalf of another person, the storage or administration of virtual assets, participation in or the provision of financial services related to virtual assets.

States can modify this list, add types of activities or set their own requirements for obtaining a VASP license. Also, some businesses must also obtain a payment system license, since they transfer fiat or cryptocurrency funds to each other.

Requirements for companies with a VASP license

Each jurisdiction, based on its risks, has requirements for companies that work with cryptocurrency. The most common of them are:

The size of the authorized capital. As a rule, the entrepreneur is required to make a deposit into the company's account in advance.
Local representative. This is usually required by offshore jurisdictions. This person acts as an intermediary between the regulator and the company on VASP matters .
Local Director. Almost everywhere a local director is required. In addition, the number of company directors and requirements for qualifications according to the fit and proper test are also established.
Having a real office.
Having a local Compliance officer. This is a person who can be held accountable if the company violates the requirements of the law.