VASP (Virtual Asset Service Provider)

A Virtual Asset Service Provider (VASP) is a company that handles crypto-assets for customers as a business and is therefore expected to register with regulators and follow financial crime rules. The category was created by the Financial Action Task Force (FATF), the global anti-money-laundering standard setter, and formalized in its 2019 guidance on virtual assets.

FATF defines a VASP through five activities performed on behalf of others:

• Exchanging virtual assets for fiat currency
• Exchanging one virtual asset for another
• Transferring virtual assets
• Custody or administration of virtual assets or the instruments that control them
• Providing financial services related to an issuer's offer or sale of a virtual asset

In practice this covers centralized exchanges such as Bitstamp, custodial wallet providers, and many OTC desks and brokers. Miners, developers of self-custody software, and purely decentralized protocols usually fall outside the definition, although regulators increasingly examine how decentralized a project really is before excluding it.

Being classified as a VASP brings concrete obligations: obtaining a license or registration, verifying customers through KYC, running anti-money-laundering and counter-terrorist-financing (AML/CFT) programs, and complying with the Travel Rule, which requires sharing originator and beneficiary information when crypto moves between providers. Jurisdictions adapt the term to local law: the EU's MiCA regulation uses the equivalent label CASP (Crypto-Asset Service Provider), while Dubai's VARA licenses firms directly as VASPs.

For users, dealing with a licensed VASP means the counterparty is regulated and supervised, but it also means identity checks and transaction data being shared with authorities. The concept is closely tied to custody and KYC, two ideas worth understanding before deciding where to hold your crypto.