In the context of the growing regulation of the crypto-asset sector, the European Union has developed different regulations to supervise service providers related to digital assets and cryptocurrencies. Two of the main licenses/regulations that regulate these activities are the VASP (Virtual Asset Service Providers) and the CASP (Cryptoasset Service Providers). Although both seek to guarantee transparency and security in the market, they have certain differences in terms of scope, requirements, regulatory frameworks, and licenses granted. Below, we mention their main differences:
Regulatory framework
VASPs within the European Union operate under the regulatory framework set by the Fifth Anti-Money Laundering Directive (5AMLD), the Financial Action Task Force (FATF), and the Markets in Crypto-Assets Regulation (MiCA). VASPs must comply with strict regulations such as anti-money laundering (AML) obligations and countering the financing of terrorism (CFT) rules.
CASPs within the European Union, on the other hand, conduct their operations under MiCA regulations and are required to comply with strict licensing, governance, and AML/CFT compliance requirements.
Type of license
VASP licenses and CASP licenses have the following differences:
Type of service
Regarding the scope of VASP licenses, this allows financial entities and companies to offer a wide range of services related to virtual assets such as cryptocurrency exchanges and custodial wallets. CASP, on the other hand, has a broader scope and covers a wider range of services, including the offer and marketing of crypto assets, custody, exchange and management of trading platforms.
Market reach
The VASP license allows financial institutions and companies to operate in international markets with implementations that are specifically tailored to each country. The CASP license, on the other hand, allows financial institutions and companies to operate only within member countries of the European Union, based on the MiCA guidelines with a harmonized and standardized regulatory framework.
Monitoring and Registration
In the case of VASPs, firms must register with national authorities in each EU country and comply with local AML/CFT regulations. In the case of CASPs, on the other hand, an EU-wide authorisation is required, allowing a CASP registered in one country to operate across the EU under the “financial passport” principle.
Main Objective
In the case of VASP, their goal is to prevent financial crimes through identity checks and transaction monitoring. On the other hand, in the case of CASP, their goal is to establish a complete regulatory framework for crypto-assets, protecting investors and ensuring the proper functioning of the market.
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