VASP License: What is it?

Creditum is on its way to acquiring a VASP license. On this article, we will focus on what a VASP license is and what it entails.

VASP license is also known as Virtual Asset Service Provider. It initially originated from the EU in a bid to do crypto regulation. The license applies to money service businesses subject to AML/CFT measures.

Although digital assets were made with a base of anonymity, they need to be regulated as they have been promoting money laundering and financing terrorism. Blockchain-based companies need to show how they secure their platforms and prevent fraud and money laundering.

VASP is still a new concept and is only available in some countries. Mature markets like the EU and the US embrace it because of tight AML/CFT regulations.

Origin of VASP?

VASPs are organizations that handle valuable digital assets. The virtual asses can be used for payment, traded, exchanged between parties, and used as a form of investment.

The Financial Action Task Force(FATF) officially released recommendations on what counts as VASPs. According to FATF, a VASP is anything that has value and can be used to exchange value.

Some entities that fall under VASPs include centralized and decentralized exchanges, wallet providers, mining pools, brokerage and trading services, and investment companies.

Why VASP?

A VASP permits businesses to give virtual assets services within a certain specific jurisdiction legally. The VASP license is issued by the government or the relevant regulatory body to ensure businesses comply with the set laws and regulations.

A crypto license lets a company offer various crypto-related services like digital exchanges.

When you open a crypto company in Europe, you enjoy many advantages, such as a clear regulatory framework and VASP registrations in different European countries in the EU.

Different countries have different approaches to VASPs depending on their regulatory bodies. For instance, the EU has Anti-Money Laundering Directives (AMLDS) set by the European Commission. In the US, it depends on the state. In other regions, such as the Asia Pacific, they are still in the process of enacting the laws in place.