What is the Difference Between CASP and VASP?

Jul 15

As the cryptocurrency landscape evolves, understanding the regulatory distinctions between key service providers is crucial for crypto enthusiasts and financial services professionals. Two such terms frequently encountered are CASP (Crypto Asset Service Provider) and VASP (Virtual Asset Service Provider). Though they may appear similar, they have distinct definitions and regulatory frameworks, especially under the EU's MiCA (Markets in Crypto Assets) regulation.

This article is a follow on from our previous article that explores the CASP FCA authorisation process.

Definitions and Scope

VASP (Virtual Asset Service Provider): Defined by the Financial Action Task Force (FATF), a VASP includes entities that engage in the exchange, transfer, safekeeping, administration, and advisory services related to virtual assets. The FATF’s definition is global and serves as a guideline for countries to develop their regulations around virtual assets.

CASP (Crypto Asset Service Provider): Under the EU’s MiCA regulation, a CASP encompasses a broader range of services within the EU context. CASPs are involved in custody, trading platforms, exchanges, and advisory services for crypto assets. MiCA aims to establish a comprehensive regulatory framework specifically tailored to the EU market.

VASP vs CASP – Key Differences

While both VASPs and CASPs serve similar functions in the crypto ecosystem, their regulatory environments and scopes differ significantly. The table below compares VASPs and CASPs in more detail.

    Feature 
    VASP 
    CASP 
  


    Regulatory Framework 
    FATF guidelines 
    EU MiCA regulation 
  

    Service Scope 
    Exchange, transfer, safekeeping, administration, advisory 
    Custody, trading platforms, exchanges, advisory 
  

    Licensing 
    Varies by country 
    Standardised EU licences 
  

    Compliance Standards 
    Country-specific 
    Uniform across EU 
  

    Geographical Focus 
    International 
    European Union 
  

Feature	VASP	CASP
Regulatory Framework	FATF guidelines	EU MiCA regulation
Service Scope	Exchange, transfer, safekeeping, administration, advisory	Custody, trading platforms, exchanges, advisory
Licensing	Varies by country	Standardised EU licences
Compliance Standards	Country-specific	Uniform across EU
Geographical Focus	International	European Union

Detailed Comparison

Let's explore the contents of the table in a bit more detail below:

Regulatory Framework:

VASPs operate under FATF guidelines, which are international and advisory. Different countries may have varied implementations based on these recommendations.

CASPs are regulated under the EU’s MiCA framework, which provides a specific and detailed regulatory environment within the European Union.

Service Scope:

VASPs: The scope of services includes exchange, transfer, safekeeping, administration, and advisory related to virtual assets.

CASPs: The scope includes not only those services but also extends to trading platforms and exchanges specific to crypto assets within the EU.

Licensing and Compliance:

VASPs: Compliance requirements vary by country, as each jurisdiction implements FATF guidelines differently.

CASPs: Must obtain specific licences under MiCA, ensuring a standardised compliance regime across the EU. This includes operational standards, consumer protection measures, and transparency requirements.

Geographical Focus:

VASPs: International focus with country-specific implementations.

CASPs: Focused on the European Union, with MiCA providing a unified regulatory approach across member states.

Regulatory Impact

The introduction of MiCA and the establishment of CASPs mark a significant development in the regulatory landscape for crypto assets within the EU. This regulation aims to bring stability, standardisation, and enhanced consumer protection to the crypto market. By requiring CASPs to adhere to strict licensing and compliance standards, MiCA not only protects consumers but also legitimises the crypto industry, encouraging greater participation from institutional investors.

Conclusion

Understanding the differences between CASPs and VASPs is essential for navigating the evolving regulatory environment of the cryptocurrency market. While both play critical roles in facilitating crypto transactions and services, the introduction of MiCA and CASPs represents a significant step towards a more regulated and secure crypto ecosystem in the EU. By providing clear definitions and regulatory frameworks, these terms help ensure a safer and more reliable market for all participants.

CASP and VASP Registration: How Can Lagom Consulting Help?

Lagom Consulting specialises in assisting firms to expand globally. We understand the regulatory requirements financial services firms need to meet and can connect you with key suppliers (such as law firms, crypto specialist compliance consultancies, recruiters, accountants, crypto-friendly banking providers etc.) through our Expansion Concierge Support.

Click the button below and complete the form to book a consultation with our team.

Navigating cryptoasset regulation can be challenging, but with thorough preparation and the right support, your firm can achieve successful registration and compliance.

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At Lagom Consulting, we pride ourselves on being more than marketing and management consultants; we are your strategic allies in building marketing strategies to market into financial services market.

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