VASP
Virtual Asset Service Provider
VASP is a virtual asset service provider: a company that exchanges, transfers, stores, or administers crypto assets for clients and falls under AML regulation.
What is VASP (Virtual Asset Service Provider)?
VASP (Virtual Asset Service Provider) is a term from the FATF working group for organizations that conduct business involving virtual assets on behalf of clients. The definition usually covers exchange between crypto assets and fiat, exchange between different crypto assets, transfer of assets, custody or administration, and participation in the offering and sale of tokens. The term refers to a function rather than a company form: an exchange, a custodial wallet, a payment operator with crypto conversion, and an OTC desk can all be VASPs at the same time.
## How it works
VASPs are subject to AML/CFT standards: customer identification (KYC), beneficial owner verification, transaction monitoring, and reporting of suspicious activity. A key element is the Travel Rule: when transferring between VASPs, the sender and recipient must pass identifying information to each other. Regulators in different jurisdictions introduce their own licensing and registration requirements, and in the EU this is linked to the MiCA regime.
## Where it appears
The term is used in regulatory documents, in agreements with banks and processors, when connecting to exchanges, and when vetting counterparties. For payment and fintech projects, VASP status determines whether a separate compliance framework is needed, and it can affect the ability to open a bank account or work with payment partners.
## Common mistakes
A common mistake is assuming that a VASP is only a centralized exchange. A wallet that does not itself control users' funds may fall outside the definition, while a service that controls keys or performs conversion may fall inside it. Another mistake is failing to check a counterparty's status before a transfer: without Travel Rule data and an understanding of the partner's licensing, the risks pass on to your business.
FAQ
Is a VASP the same thing as a crypto exchange?
No. An exchange is one type of VASP. The definition is broader and includes custodial wallets, OTC services, transfer operators, and some token issuers if they provide the listed services.
What is the Travel Rule for VASPs?
It is a requirement to pass information about the sender and recipient when crypto assets are transferred between service providers. Without this data, a transfer may be blocked or considered a compliance violation.
Does everyone working with crypto need a VASP license?
It depends on the jurisdiction and the specific activity. Registration or a license is usually required if a company provides services to clients in a regulated form, so the status should be confirmed with a lawyer in each country where you operate.