VASP

What is VASP?

A VASP (Virtual Asset Service Provider) is a regulatory classification for any entity providing crypto services on behalf of users exchanges, custodians, payment processors, and wallet providers that handle transactions.

How does VASP work?

1. A VASP identifies users through mandatory KYC procedures.
2. It monitors transactions for suspicious activity and files SARs when required.
3. It registers with local financial authorities and maintains detailed records.
4. It implements the Travel Rule to share customer data during cross-exchange transfers.

Why does VASP matter?

VASP regulations bring crypto into the same framework as traditional finance, enabling institutional participation but imposing significant compliance costs. Non-compliance risks loss of operating licenses and criminal liability.

Key features of VASP

• Must register and obtain licenses in all operating jurisdictions
• Mandatory KYC, AML, and CFT compliance programs
• Required to report suspicious transactions to financial intelligence units
• Serves as the regulated bridge between crypto and traditional finance

Examples of VASP

• Coinbase and Kraken are VASPs complying with global money-transmitter regulations.

• Fidelity Digital Assets is classified as a VASP and follows strict custody and reporting standards.