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By Urmas Rooba

Requirements for VASP & CASP

Crypto vs Fiat Exchange Service
This service facilitates the exchange of virtual assets (cryptocurrencies, tokens, etc.) for fiat currencies (traditional money), allowing seamless transactions between digital and physical currencies.

Crypto vs Crypto Exchange Service
This service enables the exchange of one or more forms of virtual assets (cryptocurrencies, tokens, etc.) for other virtual assets, offering flexible options for digital asset trading.

Execution of Crypto Transfers
This refers to the transfer of virtual assets between accounts or addresses, conducted on behalf of a natural or legal person. This transaction involves the movement of virtual assets from one address or account to another.

Custodian Virtual Currency Wallet Service
A service that stores and/or manages cryptocurrencies and other virtual assets on behalf of clients using appropriate technological solutions, while ensuring clients retain full control and ownership of their assets.

Initial Coin Offering (ICO)
This service involves offering and placing virtual assets (cryptocurrencies, tokens, etc.) to the market on behalf of the client (issuer), supporting the fundraising process for blockchain projects.

With a VASP (Virtual Asset Service Provider) or CASP (Crypto Asset Service Provider) license, it is possible to establish a focused crypto exchange or service with a custodial wallet feature, as well as a comprehensive cryptocurrency exchange with extensive functionality.

 
Crypto Regulation in Europe
Regulation of Crypto Companies, Exchanges, VASPs, and CASPs in the EU
The Financial Action Task Force (FATF) has established guidelines requiring Virtual Asset Service Providers (VASPs) to adhere to regulations designed to combat money laundering (AML) and terrorist financing (CFT). This includes licensing or registration and ensuring their activities are under robust state supervision.

The 5th Anti-Money Laundering Directive (5AMLD)
The 5AMLD mandates EU member states to regulate virtual assets and cryptocurrencies locally, ensuring registration or licensing for VASPs, crypto exchanges, and other players in the industry. The directive encourages EU member states to offer formal registration and licensing options for crypto-related businesses.

Local Regulations of EU Member States
Not all EU countries have fully implemented the 5AMLD or set up licensing frameworks for cryptocurrency businesses. For example, in Germany, cryptocurrency exchanges are regulated by BaFin, while in the Czech Republic, crypto-related activities are registered with minimal oversight.

MiCA Regulation
The Markets in Crypto-Assets (MiCA) regulation, passed by the European Parliament in April 2023, aims to create a unified legal framework for the crypto industry in the EU. Effective from January 2025, MiCA will ensure fair competition, manage financial risks, and standardize the regulation of cryptocurrency companies.

 
Requirements for VASP & CASP
Basic Requirements for Crypto Service Providers in Europe
Under the 5AMLD, cryptocurrency service providers must comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. This includes criteria related to business ownership, management, and operations.

Criteria for a Crypto-Licensed Company
The specific requirements vary by jurisdiction, but common obligations include:

Management and Ownership: The key personnel, including founders and directors, must have a clean business record, with no criminal offenses. Some jurisdictions require local management.
AML Officer: A competent Anti-Money Laundering Officer (AML Officer) or Money Laundering Reporting Officer (MLRO) must be appointed.
AML/CFT Policies: Crypto companies must have internal AML and Counter-Terrorist Financing (CFT) policies in place, including KYC procedures, risk management protocols, and transaction monitoring systems.
Suspicious Activity Reporting: Companies must report suspicious transactions to regulatory authorities and cooperate with investigations.
Data Retention: VASPs and CASPs must retain client data and transaction records for a specified period, usually at least five years.
Additional local requirements may include minimum capital, the need for a local office, and residency requirements for key personnel.

 
Payment Solutions for Crypto Business
Assistance in Payment Account Opening for Crypto Activities
Operating a VASP or CASP, crypto exchange, or crypto exchanger requires various accounts, including operational current accounts, corporate accounts with major exchanges, and accounts for transaction management.

Setting Up Payment Infrastructure
As the cryptocurrency industry is high-risk regarding AML/KYC, not all banks or payment systems will provide services to crypto businesses. Our experts offer assistance in setting up payment infrastructure, including current accounts, EMI/PSP accounts, and profiles with major crypto exchanges.

 
AML/CFT Consulting
Anti-Money Laundering & Sanctions Consulting for the Crypto Industry
Compliance with AML/CFT regulations is crucial for crypto companies. We help businesses develop and implement robust AML policies and the tools needed to identify and verify customers, monitor transactions, and comply with international financial sanctions.

Risk Management in Crypto Business
To compete in the EU crypto services market, it is essential for crypto startups to implement modern IT systems that automate customer verification, screening, transaction monitoring, and crypto wallet checks.

Due Diligence Measures
We offer expert support in developing AML/CFT documentation and internal regulations for your crypto company. Our consultants can also help you implement advanced IT solutions to meet all legal requirements and align with your business model.

 
Contact Us
For initial advice and a price quote for your European crypto startup, contact our experts by phone, email, or through our website. Our team’s experience and competence will help you integrate your blockchain or crypto exchange project into the legal framework of the European Union.