VASP
A VASP (Virtual Asset Service Provider) is a business that exchanges, transfers, custodies, or provides other services for virtual assets like cryptocurrencies.
What Is a VASP?
A VASP, or Virtual Asset Service Provider, is a business that exchanges, transfers, custodies, or provides financial services for virtual assets like cryptocurrencies. Virtual assets include Bitcoin or Ethereum. VASPs act as intermediaries between users and blockchains.
VASPs work by handling user funds and transactions. They exchange fiat currencies, such as USD, for crypto. They transfer assets between wallets on blockchain networks. Custodial VASPs store private keys securely. Under the FATF Travel Rule, VASPs share sender and recipient data for transfers exceeding certain thresholds to combat money laundering.
VASPs matter for security and regulation in crypto. They enforce KYC and AML checks to verify users. This reduces risks like fraud or illicit finance. Regulated VASPs build trust, enabling wider crypto adoption. Without oversight, they pose systemic risks to the ecosystem.
Key types include:
- Exchanges: Match buyers and sellers, like Coinbase.
- Custodians: Store assets, such as Fidelity Digital Assets.
- Wallet providers: Manage non-custodial services with regulatory compliance.
- Payment processors: Facilitate merchant crypto payments.
Also called crypto service providers, VASPs face varying rules by jurisdiction.
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definitionEthereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Its native cryptocurrency is Ether (ETH).
Read full definitionIn cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
Read full definitionFiat is government-issued currency, like the US dollar or euro, not backed by a physical commodity. It derives value from official decree and contrasts with decentralized cryptocurrencies.
Read full definitionCryptocurrency is a digital or virtual currency secured by cryptography, operating on decentralized blockchain networks to enable secure, peer-to-peer transactions.
Read full definitionThe Travel Rule requires crypto service providers to share originator and beneficiary details for transactions above a threshold to combat money laundering, as mandated by the FATF.
Read full definitionKYC (Know Your Customer) is the regulatory process where cryptocurrency exchanges verify users' identities using documents like ID or proof of address to prevent fraud and money laundering.
Read full definitionAML (Anti-Money Laundering) refers to regulations and practices designed to prevent illegal activities, such as money laundering, in cryptocurrency and blockchain transactions.
Read full definitionCrypto custody is the secure storage and management of cryptocurrency private keys, often provided by specialized custodial services.
Read full definitionReal-World Examples
Example 1: You buy Bitcoin on Coinbase, a VASP. Coinbase exchanges your USD for BTC and custodies your assets until withdrawal.
Example 2: You transfer Ethereum from Binance to Kraken, both VASPs. Under the FATF Travel Rule, they share your identity data for the transaction over $1,000.
Example 3: Fidelity Digital Assets, a custodial VASP, stores private keys for institutional clients. Users complete KYC before depositing large crypto amounts.
Example 4: A merchant uses BitPay, a VASP payment processor. Customers pay in crypto; BitPay converts to fiat instantly.
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definitionEthereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Its native cryptocurrency is Ether (ETH).
Read full definitionThe Travel Rule requires crypto service providers to share originator and beneficiary details for transactions above a threshold to combat money laundering, as mandated by the FATF.
Read full definitionKYC (Know Your Customer) is the regulatory process where cryptocurrency exchanges verify users' identities using documents like ID or proof of address to prevent fraud and money laundering.
Read full definitionCryptocurrency is a digital or virtual currency secured by cryptography, operating on decentralized blockchain networks to enable secure, peer-to-peer transactions.
Read full definitionFiat is government-issued currency, like the US dollar or euro, not backed by a physical commodity. It derives value from official decree and contrasts with decentralized cryptocurrencies.
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