The rapid pace of development of the crypto ecosystem has led to the need for new regulatory standards and terminology. In this article, we will look at the terms CASP (crypto asset service provider) and VASP (virtual asset service provider), which refer to organizations offering services related to digital assets. While their use may vary by jurisdiction and specific regulatory framework, understanding the differences between them is key to proper interpretation and compliance.
What Is a Virtual Asset Service Provider (VASP)?
The term VASP (Virtual Asset Service Provider) was coined and defined by the Financial Action Task Force (FATF). FATF is an intergovernmental organization established in 1989 to develop standards and promote effective measures to combat money laundering, terrorist financing, and other threats to the integrity of the international financial system.
In 2019 FATF updated its recommendations to include regulation of cryptoassets and virtual asset service providers (VASPs). The introduction of this term was an important step towards standardization and regulation of the cryptocurrency industry. FATF defined VASPs as companies that engage in the following activities for or on behalf of another person:
- exchanges between virtual assets and fiat currencies;
- exchanges between one or more forms of virtual assets;
- transferring virtual assets;
- custody and/or administration of virtual assets or instruments to control virtual assets;
- participation in and provision of financial services related to the offering and/or sale of a virtual asset by the issuer of the virtual asset.
The definition covers any person or organization that provides these services on behalf of or for the benefit of its customers.
What is a Crypto Asset Service Provider (CASP)?
The term CASP (Crypto Asset Service Provider) first appeared in 2020 with the publication of the draft Markets in Crypto Assets Act, or MiCA (Markets in Crypto-Assets). MiCA aims to create a single legal framework for the management of virtual assets and cryptocurrencies across the European Union. It is part of an effort to regulate and oversee the cryptocurrency market in the EU, enforcing anti-money laundering (AML) and counter-terrorist financing (CTF) rules.
Under Mica, which was finalized in June 2023, CASP represents companies or organizations offering services related to digital assets such as cryptocurrencies. This includes a wide range of activities, such as:
- storing and managing crypto-assets on behalf of third parties;
- operation of a trading platform for crypto assets;
- exchanging crypto assets for fiat currency, which is legal tender;
- exchanging crypto assets for other crypto assets;
- executing orders for crypto assets on behalf of third parties;
- placement of crypto assets;
- accepting and transmitting orders for crypto assets on behalf of third parties;
- providing crypto asset advice.
MiCA aims to ensure that all businesses providing any of the above services to European citizens meet the CASP definition. The regulation also takes into account future markets, protecting the industry from potential exemptions or loopholes.
Comparison of VASP and CASP
Key differences between these terms include:
Regulatory bodies
VASP is regulated internationally by the FATF, whereas CASP is regulated by MiCA within the European Union.
Date of introduction
VASP was introduced in 2019, whereas CASP came into existence in 2020 with the MiCA draft regulations.
Scope
VASP has a global scope by international standards, while CASP applies exclusively within the EU.
Main activities
Although there is overlap in activities, VASP and CASP have differences in the list of regulated services. CASP includes more detailed activities such as operating a trading platform for crypto assets and providing crypto asset advice.
Regulatory focus
Both terms focus on enforcing rules under AML and CTF, but MiCA also emphasizes the creation of a single legal framework for cryptoassets in the EU.
To make it clearer, we have put together a comparison table for you with the main differences between these terms:
| Parameter | VASP (Virtual Asset Service Provider) | CASP (Crypto Asset Service Provider) |
| Organization | FATF (Financial Action Task Force) | MiCA (Markets in Crypto-Assets Regulation) |
| Year of introduction | 2019 | 2020 |
| Regulatory region | Global (international standards) | European Union |
| Objectives | Combating Money Laundering (AML) and Terrorist Financing (CTF) | Creation of a single legal framework for crypto asset management in the EU, AML and CTF |
| Main types of activities |
|
|
| Regulated services | Services related to virtual assets | Crypto Asset related services |
| Scope of application | Any person or business engaged in the above activities | Any individual or legal entity that professionally provides crypto asset services to external clients |
Virtual Asset Service Provider or Crypto Asset Service Provider?
The main difference between these two terms is their regional usage and regulatory specificity.
VASP is more common outside the European Union and is defined by the FATF. The term covers companies that provide services related to virtual assets, such as the exchange, storage, and management of virtual assets. The focus is on international standards for combating money laundering and terrorist financing.
CASP has been adopted in the European Union under the MiCA regulation. This term includes a broader range of services related to crypto-assets, such as asset management, operation of trading platforms, and the provision of advice. MiCA offers more detailed regulations to ensure the safety and transparency of crypto markets in the EU.
If your business is based outside the EU, in line with international standards, use the term VASP, especially if you do not offer services in Europe. If, on the other hand, your business is based in the EU and provides MiCA-defined services, then the term CASP would be more appropriate.
In formal discussions, it is worth remembering that the MiCA definition of CASP is broader than the FATF definition of VASP and includes additional elements. In informal conversations, these terms can be used interchangeably as long as the context is clear.
Bottom line
In summary, understanding the differences between the terms VASP and CASP is important for proper application in different contexts. VASP, defined by the Financial Action Task Force on Money Laundering, is used internationally and covers a wide range of services related to virtual assets. Whereas CASP, adopted in the European Union under the MiCA Regulation, is a narrower and more detailed term covering crypto asset-related services within the EU. It is important to keep these differences in mind when discussing and regulating crypto assets to comply with relevant regulatory requirements and avoid confusion.