VASP License
To develop a legal and successful virtual asset business, you need a VASP License. If you have not yet decided in which jurisdiction to open a business research VASP regulations by country on our webpage.
VASP license in Europe
The European VASP License allows you to work legally in the EU, makes VASP-business transparent, and increases the trust of customers, partners, and state regulators. This is a promising direction for entrepreneurs to engage in VASP.
The European Parliament approved MiCA on April 20, 2023, making it a groundbreaking global legislation that sets a precedent for other jurisdictions.
MiCA is a regulatory framework developed by the European Commission to regulate markets for virtual assets and related services that are not currently covered by EU regulations
It has been developed since 2018 and aims to provide a single licensing regime for all EU member states to harmonize regulation on the creation and trading of virtual assets in line with the European Digital Finance Strategy. MiCA is expected to become effective sometime between mid-2024 and early 2025.
The adoption of MiCA will directly affect the regulation of any company that wants to operate in the EU, even if it seeks customers outside the EU. However, MiCA will not affect national regulatory frameworks that are already in force in some EU countries. These frameworks may supplement MiCA regulations and impose additional requirements that companies and virtual asset service providers will also have to comply with. That being said, MiCA advocates that every company should be subject to regulation, hence being a VASP license holder.
Even before the MiCA implementation, European countries’ regulations had a single scenario, corresponding to the laws of the EU. However, in practice, they were having significant differences, especially in business models related to virtual assets.
Therefore, choosing a jurisdiction must entail considering the specifics of regulations, conditions, and advantages of the VASP licensing scope in the EU countries. In most cases, a VASP license will be necessary. Regardless of the chosen jurisdiction, each regulator defines several specific requirements that must be met to obtain a VASP license successfully.
Lithuania
Lithuania stands out as the top European jurisdiction for the establishment of VASP-related enterprises. The process of obtaining a Lithuania VASP license is quite simple and fast. The state has the most progressive understanding of the economic future and has already implemented some of the principles of the MiCa Directive. And the current Lithuanian legislation allows registering a VASP company and paying the required amount of authorized capital (125,000 €) in installments.
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Estonia
Estonia stands out from other countries for its progressive support of the VASP industry and fintech innovation, making it one of the most attractive jurisdictions for VASP startups and investors.
VASP license in Estonia has several advantages, including the ability to work in all EU countries and low taxes. Thanks to modern digital infrastructure, the use of electronic signatures, and identification cards, obtaining a license for a VASP is fast and efficient.
Poland
In November 2021 Poland introduced regulation of virtual assets. Companies engaged in this sphere must register in a separate state register of VASP companies (a so-called Poland VASP license). Moreover, a company must meet relatively simple procedural requirements and the registration period is relatively short.
After signing bilateral agreements with 84 countries of the world to avoid double taxation, the country has confirmed the status of a favorable jurisdiction for VASP-businesses in terms of taxation.
Czech Republic
There is currently no specific VASP license in the Czech Republic.
Nevertheless, to legally conduct VASP activities, it is necessary to register compulsorily with the Trade Licensing Registry supervised by the Czech Ministry of Industry and Trade. With this license, companies are allowed to operate in any EU country. There is no requirement to open a corporate account to register a company (in the form of an LLC) and the minimum share capital requirement is 1 CZK per shareholder.
Spain
VASP regulation in Spain is still in development, but on February 17, 2022, the Spanish government adopted a Circular that defines the status of virtual assets and regulates their advertising. Virtual assets are not banned in Spain but are not recognized as legal tender.
Legal activity in the VASP business requires registering as a VASP and obtaining a VASP License in Spain.
Licensed companies can legally provide services related to the exchange and storage of virtual assets, participate in investment projects, and develop their technology platforms.
Switzerland
In Switzerland, the financial supervisory body FINMA is responsible for regulating virtual assets and licensing blockchain projects. This organization actively cooperates with other government agencies to develop a legislative framework in this area. Virtual assets are recognized as legal assets according to the federal tax authorities. There are various initiatives for the development of the virtual assets industry in the country, including loyal taxation, support for startups, and development of the technological base. For legal VASP activities, you need to obtain a VASP license in Switzerland.
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Slovakia
The Slovak government has strict requirements for the regulation of virtual assets and a license for this activity. Anti-money laundering (AML) legislation and KYC regulations apply to regulation and licensing. In March 2018, Slovakia passed laws virtual assets. Following these laws, all profits that were derived from virtual assets transactions fall under taxation. Despite several strict rules, the Slovakia VASP license remains attractive to investors: there are no citizenship requirements, no restrictions on capital flows, and no currency controls. The tax is 22%, but it can be reduced to 0.5% with an agent scheme and proper accounting.
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Portugal
Companies wishing to engage in virtual assets-related activities in Portugal are classified as VASPs (virtual asset service providers) and must obtain a license from the Banco de Portugal before starting operations. Unlike most jurisdictions, no minimum share capital is required to obtain a VASP license in Portugal. In addition, there are no restrictions or requirements for the declaration of virtual assets and taxation of virtual assets income for individuals.
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Bulgaria
There is no need to obtain a special VASP license, as virtual assets are not considered a financial instrument and are not regulated by a financial regulator. However, companies have to comply with anti-money laundering and anti-terrorist financing regulations and regulate transactions above 15,000 €. To start, one must register a company or obtain a financial license from the FSC. Bulgaria offers stable foreign trade development, economic security, access to the EU market, and loyal taxation.
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United Kingdom
The UK stands out as an attractive location for VASP companies due to low taxes, simplified registration, access to the EU, and governmental support for the business ecosystem. The Financial Conduct Authority (FCA) regulates the virtual assets market, which involves transaction and business controls to protect users and market integrity.Although there is no mandatory requirement to obtain a UK VASP license, getting permission to operate involves registering with the FCA. The process entails submitting documents such as business plan, risk management policy, and paying a fee. It also requires the company to be registered in the UK, have an office and comply with AML/CFT policies.
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Cyprus
Running a VASP business in Cyprus requires a Cyprus VASP license, which can be a complicated process. However, licensing offers several advantages: clear regulation, an attractive tax system, a variety of licenses, recognition of a wide range of financial instruments, an active virtual assets ecosystem, and access to banking services. To obtain a license, companies must be registered in Cyprus, have a physical office, a local bank account, a qualified team, comply with EU directives, and have adequate customer records and data security systems. CySEC expects companies to develop AML policies and establish effective company management and operational procedures.
ExploreComparative table of VASP regulation in Europe 2024
| Poland | Lithuania | Czech Republic | Estonia | Slovakia | Spain | Bulgaria | Portugal | UK | Switzerland | Cyprus | |
| Project time frames | up to 1 month | 1 to 2 months | 1 to 2 months | 6 to 8 months | 1 to 2 months | 5 to 6 months | Up to 1 month | 5 to 7 months | 9 to 12 months | 2-3 months | Up to 6 months |
| State fee for application | 0€ | 0€ | 0€ | 10 000€ | 0€ | 0€ | 25€ | 475€ | From 2350 | approx. 2 000 CHF | 10000€ |
| Required share capital | PLN 5000 (approximately EUR 1100) | EUR 125 000 | 1CZK | 250 000€ | 5000€ | 1€ | 1€ | 0$ | 0 GBP | 20 000 CHF (LLC); 100 000 CHF (LTD) | from 25000€ |
| Corporate income tax | 19% | 15% | 21% | 0% on reinvested profits. 20% on withdrawn profits | 21% | 15% for the first 2 years of company being taxed and 25% afterwards | 10% | 21% | From 19% to 25%, depends on your profits | 11.9% to 21%; | 12.5% |
| Annual supervision fee | 0€ | 0€ | 0€ | 2% of the total transaction volume per year | 0€ | 0€ | 0€ | 0$ | 0 GBP | approx. 3 500 CHF | 5000€ |
| Local staff member | Not required, recomended | Required (AML Officer) | Not required, recomended | Local Director, Local AML Officer, Local Internal Auditor, Local External Auditor | Local Director | Local AML Officer | Not required, recomended | Local Director | Not required, recomended | AMLO, Director | AML Officer, Director |
| Physical office | Not required, recomended | Not required, recomended | Not required, recomended | Required | Not required, recomended | Required | Not required, recomended | Required | Required | Yes | Required |
| Accounting audit | Not required | Not required | Not required | Required | Not required | Not required | Not required | Required | Required | Yes | Required |
| Sustainability | Not sustainable* | Sustainable | Not sustainable | Sustainable | Not sustainable | Sustainable | Not Sustainable | Not Sustainable | Sustainable | Stable Regulatory Regime for at least 5+ years | Sustainable |
| Bank account options | European EMIs | European EMIs | European EMIs | European EMIs | European EMIs | European EMIs | European EMIs | European EMIs | European EMIs | Local VASP-friendly Banks, EMIs | Some European EMIs, Midshore EMIs |
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VASP license in other jurisdictions
MSB Canada
FMSBs and MSBs are two types of financial businesses in Canada that must register with The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and comply with their reporting and recordkeeping obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). An FMSB is a non-banking institution that provides financial services outside of Canada and an MSB provides financial services domestically. Canada MSB license holders have advantages such as no minimum authorized capital, a high level of economic freedom, a sound banking system, and access to a large domestic market with minimal regulatory costs.
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UAE
Registering a VASP in the UAE is becoming a popular option due to the free zones where businesses can trade and store virtual assets. VASP Licenses can be obtained in the following zones: DMCC, DAFZA, ADGM, and IFZA. The requirements, conditions, and features of a VASP license in Dubai depend on the selected zone.The UAE government recognizes the possible risks associated with virtual assets, but the country is attractive for VASP businesses due to loyal taxation (corporate tax, dividends, and personal income tax – 0%), comprehensive legalization of virtual assets, and the absence of import and export tax.
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Kazakhstan
Kazakhstan now has a complete system for regulating VASP activities, and the government is actively accepting applications for VASP licenses. On April 1, 2023, the Law on Digital Assets came into force, which created a legal framework to control the issuance and circulation of digital assets in the country. The law allows issuing and circulating unsecured digital assets through the Astana International Financial Center (AIFC). VASP license in Kazakhstan holders providing financial services through AIFC are exempt from tax payments until January 1, 2066.
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Georgia
To obtain a VASP license in Georgia, you first need to incorporate a company.It is recommended to do it in the Free Industrial Zone (FIZ) because of preferential taxation and other favorable conditions. At the moment, the local digital assets sector is controlled but not regulated. The process of registering a company and obtaining a license takes only 2-3 weeks.
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Hong Kong
Hong Kong topped the global “VASP-readiness” ranking in 2022, surpassing the US and Switzerland, thanks to its high number of blockchain startups and VASP per capita. Aiming to become a global hub for the VASP industry, Hong Kong has actively funded blockchain projects, developed a regulatory framework for VASP, and is promoting the use of blockchain technology through The Hong Kong Monetary Authority (HKMA) and the e-HKD pilot program. The introduction of new regulations in April 2023 requires all virtual asset service providers to obtain a Hong Kong VASP license, highlighting a robust regulatory framework and further promoting the development of the digital assets ecosystem in the region.
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Singapore
Singapore is building its reputation as one of the most attractive jurisdictions for virtual assets, offering clear regulation and support for innovation. As an important financial center with a favorable tax regime, Singapore attracts VASP licenses and guarantees transparency of operations. The Payment Services Act 2019 requires exchanges to obtain a VASP license in Singapore to exchange virtual assets and fiat currencies, building trust and reputation in the global financial industry. To obtain a license, companies must meet the regulator’s requirements, including being registered in Singapore, having an office and resident director, and adhering to risk management and anti-money laundering policies.
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Gibraltar
Gibraltar stands out as an attractive jurisdiction for digital assets business due to its flexible regulatory structure and favorable business environment. The country offers clear opportunities for ICOs, virtual assets, and wallet providers, strengthening its position in the blockchain community. With low taxes and a specialized legal framework to regulate VASP activity, Gibraltar attracts leading virtual assets trading platforms such as Huobi and Coinfloor. The recognition of VASP as a means of payment, low tax burden, and strict anti-money laundering measures make Gibraltar ideal for VASP businesses. Obtaining a Gibraltar VASP license here promises access to global markets and support for an innovative ecosystem while requiring high standards of investor protection and operational transparency.
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El Salvador
El Salvador is attracting VASP business attention as the first country to officially recognize Bitcoin, offering tax incentives for licensed companies. Here, company registration, business plan development, and AML/KYC policies are required to obtain an El Salvador DASP license, making it easier to do business and invest in digital assets. El Salvador’s regulation supports transparency, investor protection, and effective financial crime risk management, creating a favorable environment for VASP startups and international expansion.
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Labuan
Labuan, a federal territory of Malaysia, stands out as a favorable jurisdiction for VASP companies due to its low taxation and supportive regulatory environment. In 2018, the Labuan Financial Services Authority began granting licenses to Digital Assets-related businesses, making it easier to engage with international markets with a corporate tax rate of just 3%. Labuan offers transparent operations, access to global markets without the need for a local partner, and the ability to utilize Malaysia’s 70+ tax treaties. Obtaining a Labuan VASP license opens doors for international VASP businesses with convenient conditions for growth and expansion.
ExploreComparative table of VASP-regulation by other jurisdictions 2024
| Georgia | El Salvador | Kazakhstan | UAE | Canada | Singapore | Labuan | Hong Kong | |
| Project time frames | 2 to 3 months | 3 to 5 months | 6-7 months | 4 to 6 months | 3 to 4 months | 12 months | 3 to 6 months | from 1 year |
| State fee for application | 1500€ | 0$ | 70 000 USD | 25 000 USD | None | 1 000 USD | 1 500 USD | 10 000 USD |
| Required share capital | 0$ | 2000$ | 100 USD | from 100 000 USD | No Requirement | 100 000 USD | 110 000 USD | 640 000 to 1 mill USD |
| Corporate income tax | 0% on reinvested profits. 15% on withdrawn profits | 0% | 20% | 9% | 2-12% | 17% | 3% | гк – 8.25% first 2mil profits, 16.5% further |
| Annual supervision fee | 0$ | 0$ | 35 000 USD | 50 000 USD | None | – | 1 500 USD | – |
| Local staff member | Local Director | Not required, recomended | AML Officer | AML Officer & Director | Not Required, Recommended | AML Officer, Director | AML Officer and Director | AML Officer, 2 Directors |
| Physical office | Local Office | Not required, recomended | Required | Required | Required | Required | Required | Required |
| Accounting audit | Required | Not required | Required | Required | Not Required | Required | Required | Required |
| Sustainability | Sustainable | Sustainable | Sustainable | Sustainable | Sustainable | Sustainable | Sustainable | Sustainable |
| Bank account options | Some European EMIs, Midshore EMIs | Some European EMIs, Midshore EMIs | Midshore EMIs | Some European EMIs, Midshore EMIs | European EMIs | European EMIs | Some European EMIs, Midshore EMIs | European EMIs |
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The standard process for obtaining a VASP license
The process for obtaining a VASP license can vary from jurisdiction to jurisdiction. Some things may vary from state to state, so it’s important to conduct a detailed analysis of the legal framework and requirements of the VASP industry in the specific jurisdiction where you plan to operate.
In general, the process of obtaining a VASP license in different countries may include the following steps:
- Decide on the jurisdiction in which the company will be registered. It is important to consider the requirements of different states for the legal form allowed for such activities, the size of the authorized capital, the residence of the founders, the ideal reputation of directors and beneficiaries, the number of shareholders, and other nuances.
- Register the company in the selected jurisdiction. Please note: usually large stock exchanges have a complex structure that includes several companies, each of them performs certain functions. This allows you to optimize taxation and reduce the risks associated with doing business.
- Collect and prepare necessary documents and information to submit to the regulator. As a rule, to obtain a VASP license, it is necessary to submit several documents, such as a business plan, a description of services offered, information on the project team, financial statements, etc.
- Open a corporate account (in most cases, with a bank of the selected jurisdiction)
- Hire specialized staff, including certified employees with experience and a reputation in finance and virtual assets. This usually applies to hiring AML officers and Compliance officers.
- Develop and implement security policies and protect users’ data.
- Prepare the necessary technical and software for the exchange, by the needs of users and the requirements of regulatory bodies.
- Apply for review by an authorized body for obtaining a license. During the application review process, additional information or documents may be required, and the company may be checked for compliance with requirements and standards.
- Once a company passes all the steps of the review and meets the requirements, it receives a VASP license.
Standard AML requirements
AML (Anti-Money Laundering) is a set of measures and procedures aimed at combating money laundering and terrorist financing. Several standard AML requirements must be complied with when conducting VASP activities:
- Customer Identification (KYC). VASP companies must conduct a KYC process for all of their customers to verify their legitimacy and check for links to criminal activity.
- Transaction Monitoring. Transactions conducted on the platform should be monitored and limits set on the amounts that can be transferred. This helps identify potential money laundering and terrorist financing schemes.
- Risk-based approach. Companies should assess the risks associated with money laundering and terrorist financing and take measures to mitigate those risks.
- Internal acts. It is necessary to develop several rules that will regulate the procedures and measures to comply with the legislation on combating money laundering, as well as minimize the risks of money laundering.
- Training and education. Companies should train their employees on the basics of AML legislation and anti-money laundering and counter-terrorist financing procedures.
- Record Retention. Records of their customers and their financial transactions should be retained for a specified period to ensure they are available for inspection by regulators and law enforcement.
- Reporting. It is a mandatory requirement to provide reports on their anti-money laundering and counter-terrorist financing activities as required by regulators.
Note that standard AML requirements for VASP companies may vary by jurisdiction. For example, different jurisdictions may have different requirements regarding the collection and retention of customer information, document retention periods, risk criteria, reporting, and other aspects. In addition, some jurisdictions may impose stiffer penalties and sanctions for violations of these rules than others.
Therefore, it is important to consider and comply with local legal requirements to avoid regulatory violations and sanctions.
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Practice Areas
VASP license for exchange and custody services
Licensing of auxiliary virtual asset related services
Registration of investment digital asset fund
Legal support ICO/IEO projects
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FAQ about VASP license?
How to get a VASP license?
There is no single algorithm that is suitable for all jurisdictions. The complexity and duration of obtaining a VASP License depend on the current legislation and regulatory requirements of each country. If we gather the general requirements, they may concern a certain amount and liquidity of the authorized capital, legal form of business, the reputation of owners, legal address, bank account, compliance with AML/KYC rules, etc.
Different jurisdictions may have different state fees, application processing times, documentation packages, and special requirements.
Usually, it takes 1-6 months to review the application and the process of obtaining a license is as follows:
- Selecting a jurisdiction and registering a company.
- Opening a bank account.
- Selection of specialized employees.
- Preparation of technical equipment and software.
- Gathering and submitting documents required by regulators.
- Waiting for the VASP license application to be processed.
- All entrepreneurs must study the requirements of local regulators, the country’s legislation, AML/KYC rules, etc.
How much does a VASP license cost?
Like the licensing process, the cost of a legal permit also varies from jurisdiction to jurisdiction. There are relatively expensive permissions like in UAE from $15.000, and there are more budgetary permissions, for example in Estonia, the license costs from 4900Є. In addition, you need to consider the amount of registered capital, the cost of office rent and purchase of equipment, staff recruitment, state fees, software, etc.
To calculate the exact cost of opening a license for a VASP company in the desired jurisdiction – contact our lawyers for a detailed consultation.
Which jurisdiction is the most profitable for the VASP business?
Each jurisdiction has its advantages and pitfalls. Before opening a License, it is necessary to study the legislation of the country to choose the best option. The choice may depend on the type of activity, financial capabilities of the company, and business plan.
If you are not ready to spend a lot of money to start a company, you can consider an Estonian license. If you are interested in free economic zones, and the rapid development of the VASP sector, and you are willing to overpay for these benefits – you will be fine to open a VASP-business in the UAE.
The Czech Republic is strictly regulated, but with the Czech license you can work in all EU countries, it provides more freedom in the variety of services offered and has several other advantages.
In many jurisdictions, there is a necessity for minimum charter capital, while in Canada it is not required at all. At the same time, the Canadian government has introduced a high tax rate of up to 33%.
Every situation is different and it is important to approach the issue constructively. To save time and finances – contact our specialists.
Is there any taxation for VASP companies?
Every year virtual assets become more regulated. And along with the regulations, comes taxation. Virtual assets are still part of a new industry, so not all countries have finally approved the mechanism of tax collection. However, this practice is present in almost every jurisdiction and may differ depending on the legislation of the country.
Let’s look at some examples:
- The UAE is a very attractive country on the tax side for VASP businesses that trade: the federal income and corporate tax rates are 0%. However, since the beginning of 2018, the government introduced new rules on the tax rate and it is 5%. Your company can be set up on a zero-tax basis, but regular transactions will be subject to 5% VAT.
- Poland and Slovakia have a stricter tax system but have signed bilateral tax avoidance agreements with more than 70 countries.
- In Canada, VASP activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15 to 33%.
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