VASP Licence

In conjunction with the fast-moving development of the cryptocurrency market and the enhanced regulative scrutiny of the industry, this license is turning into a must to operate legally. The VASP license will grant a legal basis for the company to operate in various countries by exchanging, transferring, and storing cryptocurrencies. The most promising jurisdictions where to obtain a VASP license in 2024 are Lithuania and the Czech Republic. The following article will outline the main opportunities opened by the VASP license and analyze the benefits of its acquisition in these states.

What is a VASP license?

A VASP license or Virtual Asset Service Provider License is basically regulated under the guidelines of FATF or International Money Laundering Task Force. It provides transparency for cryptocurrencies. After getting licensure, a firm shall be authorized to perform the following activities:

• Cryptocurrency Exchange: trading of cryptocurrency for Fiat money or any other digital asset.
• Crypto Storage: Custody or safekeeping services with regards to crypto assets of third-party owners.
• Crypto Transfer: Crypto transfer from one user to another.

The choice of country to obtain a VASP licence depends on many factors, including the regulatory environment, tax policy and business climate. Lithuania and the Czech Republic have a number of advantages for crypto companies which are going to expand their operation in Europe. Obtaining a VASP licence in these countries will not only legalise the activity of exchanging, transferring and storing cryptocurrencies but also provide the company with a reputational advantage on the international arena.

Cost of VASP license

From the growing interest in cryptocurrencies to the need for regulation, this issue seems to face many companies: obtaining a license of a Virtual Asset Service Provider. Such a license costs differently depending on a country, complexity of the procedure, and requirements to licensees. In the given article, we touch upon the issue of the cost and requirements for obtaining a VASP license in two European countries-the Czech Republic and Lithuania-and analyze which factors influence the cost of a license.

Cost of VASP license in the Czech Republic

Obtaining a VASP license in the Czech Republic is relatively inexpensive. The cost starts from €3,400, placing this license among the most appealing in Europe in terms of initial investment. Major work stages:

1. Filing: The preparation of documentation and a formal application to regulators includes the following steps.
2. Legal support: This is to ensure that the company’s activities are brought into conformity with Czech law, which should also be taken into consideration during the implementation of activities on its basis or foundation.
3. Compliance checks: Compliance with FATF, and local anti-money laundering requirements.

In some instances – e.g., in cases when a company needs more legal training or complex security integrations – these costs could be much higher.

Lithuania VASP License Cost

The Lithuanian license is much more expensive, its initial fee starts from 9900 euros. It is justified by more strict requirements for compliance and, hence, more complicated licensing procedure. The main components of cost are the following:

1. Preparation of documentation: Much more extensive than in the Czech Republic, needs to be very detailed, describing absolutely everything about the activity.
2. Compliance and technical audits: Lithuania provides for very serious audits of management systems and data security.
3. Legal and advisory services: This would involve the need for further, deepened legal support and consultation on adjusting to Lithuanian legislation.

Requirements and cost analyses

The decision on which country to apply for a VASP license depends not only on the cost of a license but also on the goals of the business of a company, market peculiarities, and strategic plans for the future. Therefore, the Czech Republic provides generally lower start-up costs and less complex barriers to entry, which may be more suitable for start-ups or enterprises with scant resources. By contrast, Lithuania, with a higher cost of establishing an undertaking, provides a more restrictive and better-protected regulatory regime, which could be preferable to larger companies or those seeking a stronger regulatory environment.

A decision to apply for a VASP license between the Czech Republic and Lithuania should be made in view of detailed financial capability analysis, business strategy, and special cryptocurrency operation requirements. While both countries present huge opportunities, the secret to successful operation is to understand and implement regulatory requirements that can finally make a difference in the value of overall business performance.

VASP license Lithuania

Lithuania is turning into the most attractive region within Europe for such areas as cryptocurrency turnovers due to the country’s progressive and friendly approach towards the regulation of virtual assets. Already in 2024, more than 500 companies have benefited from obtaining a licence for the conduct of cryptocurrency turnovers, confirming Lithuania’s reputation as a leader in this sphere.

Virtual Asset Service Provider (VASP) Licence

The license for VASP in Lithuania is issued by FCIS, which stands for Financial Commission for Combating Money Laundering. It is such a license that shall be of high importance for those companies planning to deal with cryptocurrencies and other virtual assets legally.

Obtaining a license in Lithuania is a complex process that needs good preparation and knowledge of local legislation. The whole process of application includes company documentation, sources of funds, and transparency, as well as AML/CFT programs.

In the light of growing popularity of cryptocurrencies and virtual assets, Lithuania turns into the strong support for operating legally and effectively within this dynamically developing area. Having a VASP licence opens wide opportunities for companies in the sphere of international cooperation, reinforcing their legal protection at both the European and global level.

This country supports cryptocurrency initiatives not only at the very top level but also actively fosters an investment-friendly environment, turning it into one of the best places to launch and scale a virtual asset business in 2024.

VASP licence in Estonia

Estonia was among the first to regulate cryptocurrencies back in 2017, immediately becoming one of the world leaders in issuing virtual asset licenses, having issued over 2,000 of them. But over the course of just a couple of years, the concept has changed greatly – regarding how this fast-growing industry was regulated – it hit at Estonia’s status as a cryptocurrency hub really hard. I mostly agree with this statement.

Historical context

Estonia became one of the first countries in the world that adopted legislation, which allowed companies to lawfully operate in the field of cryptocurrency. This liberal policy attracted a lot of international firms seeking to get a Virtual Asset Services Provider license from the country. That’s where the things began to go wrong.

Growth and popularity

Due to its early creation, the Estonian crypto market was actually grown at a rapid pace in size, developing related technologies and attracting investments. The number of licensed companies outgrew the bar of 2,000, which began to actually have some noticeable role in the national economy.

Regulatory changes

Eventually, the Estonian government started to close ways through which money laundering and terrorist financing can be run because holders of cryptocurrency licences started coming with stringent requirements. This led to two major waves of licence revocation, because of which most companies lost the right to run the activity in the country.

Current state of market in Estonia

Until the year 2024, there are only a few companies remaining in Estonia that have a valid VASP license. The policy on new licenses has become very strict in this country, and this has affected the general perception of Estonia as a cryptocurrency hub.

Reasons for tightening regulatory measures

Combating financial crime

Increased focus on the transparency of transactions and requirements of AML/CFT.

Protection of investors

Namely the need for protection of the rights and interests from market participants.

Combating financial crime

Increased focus on the transparency of transactions and requirements of AML/CFT.

Changes in Estonian regulatory policy influence the situation in the entire cryptocurrency market of the country. Stricter demands and a decrease in the number of licensed companies have influenced the attractiveness of Estonia as a jurisdiction for crypto-business. Thus, Estonia keeps high regulatory requirements, gives a certain focus on security and transparency, which may help get confidence back over a longer time and lure responsible players into the market. With new restrictions and hurdles, Estonia keeps on being an important player in the European map of cryptocurrency jurisdictions.

VASP-licence Malta

Malta is literally known as the ‘Blockchain Island’ for its innovative regulative approach to the crypto industry and blockchain technology in general. The country was the first in the European Union to come up with a far-reaching regulative proposal regarding VASP licensing. While such a proposal had looked appealing enough, oncoming start-ups of the crypto world find Malta less achievable because of high requirements for the authorized capital.

Regulatory environment in Malta

In 2018, the government of Malta had passed three laws that allowed regulating DLT technology, among them was establishing a clear legal framework regarding the process of cryptocurrency transactions and blockchain platforms. Such steps were taken to attract crypto investors and startups in order for them to contribute to strengthening the country’s economy by means of innovative technologies.

Key requirements for obtaining a VASP licence:

• Authorized capital: The minimum amount of €730,000 is rather high compared to most other jurisdictions.
• Adherence to AML/CFT policy: Very stringent AML/CFT.
• Validation of management competency: All key persons of the company need to show relevant experience and qualifications.

One serious obstacle for new companies and startups is high authorized capital. Such a demand from the authorities means that Malta wants companies involved in cryptocurrency trading to be financially sound and serious players. However, such a policy also excludes opportunities for SME-players, which could mean a great contribution to innovation and market development.

Impact on crypto-entrepreneurs

The result is that many crypto entrepreneurs and startups are bypassing Malta to look for jurisdictions where they can launch their projects more conveniently, where the initial capital required is relatively smaller, for example, Estonia or Lithuania. This means Malta is losing out on innovators who, if they were to invest in Malta, would bring value to the island despite its regulatory advantages.

With the high standards and requirements, Malta is considered one of the most protected and secure jurisdictions for cryptocurrency transactions within the European Union. Maintaining Malta in that position in the crypto industry may require adaptation of the requirements by Malta to involve a wide range of investors and entrepreneurs wishing to innovate and develop the market on the blockchain island.

VASP licence Czech Republic

The Czech Republic has positioned itself in recent times as one of the friendliest and most approachable jurisdictions to start a cryptocurrency business among European Union countries. Its loyal regulatory norms, minimal documentation burden, and possibility to establish a company remotely attract the attention of crypto-entrepreneurs from all over the world.

Advantages of the Czech regulatory environment

• Low cost and minimal barriers to entry: Minimum financial and administrative barriers to opening a crypto business are ensured in the Czech Republic. This, especially, makes the country very attractive for startups and individual entrepreneurs in search of opportunities to develop their projects in a stable and innovation-supportive jurisdiction.
• Fast and remote registration process: It allows the Czech Republic to provide fast and fully remote company registration, making life much easier for foreign investors. This is an excellent opportunity in today’s world of digitalisation and pandemic, where there may be limited personal visits to the country.
• Loyalty of regulatory authorities: It means that given the flexibility and openness of the Czech regulators when it comes to regulating cryptocurrency transactions, they essentially create an environment which is really good in terms of growth and development in the context of a cryptocurrency market.

Obtaining a VASP license in the Czech Republic

Application process:

Obtaining a license for the performance of virtual asset services is based upon the fulfillment of regulatory imperatives by filing the required documentation. However, it is less burdensome, the requirements being less stringent, as compared to other EU countries, and thus facilitates simpler and faster licensing. This includes:

1. Document preparation: Including corporate documents, AML policy, and proof of identification of key persons.
2. Application Submission to the Regulator: The application, at this stage, comes along with attachments of all required documentation, is then sent to the relevant government agency for approval.
3. Licensing: After verification of the submitted data and documents, the company gets a VASP license that will permit the conduct of its activities legally in the field of cryptocurrencies in the Czech Republic.

The Czech Republic probably offers the most loyal and accessible environment for launching cryptocurrency projects within the European Union. Minimum required documentation, the possibility of remote registration, and the loyal attitude of regulators turn this country into a real paradise for crypto-entrepreneurs in 2024. That is the kind of environment where innovations are welcomed and where capital is attracted to the country for its economic and technological development.

VASP licence Poland

Poland has joined those few European Union countries which give the opportunity to legally obtain a virtual asset transaction licence – VASP. Already today, more than a thousand private individuals and legal entities have received a cryptocurrency licence in Poland, which shows quite a big interest in this jurisdiction on the part of crypto-entrepreneurs. However, for all the advantages, Polish cryptocurrency market also has some peculiarities that can complicate a process of licensing, especially for those people who do not plan to stay in this country for a long period of time.

Advantages of the Polish VASP licence

• Recognition and legitimacy: A VASP license in Poland allows businesses to operate within a legally set framework, which itself is a prerequisite for investors and the confidence of clients. It serves as an indicator of a certain level of legitimacy and safety against possible legal risks.
• Flexibility and variety of options: On the whole, Poland opens wide perspectives for cryptocurrency business regarding exchange, asset management, and other services concerning virtual assets. That is why the country is very attractive to entrepreneurs willing to diversify their business models.
• Complexities and bureaucratic procedures: Despite the many advantages, the Polish regulatory environment is far from easy for those not planning to stay permanently. For example, project realization can be influenced by bureaucratic procedures and formal requirements, especially for foreign investors.

Strong points of challenge include:

• Requirements for local presence: Poland requires a local office or representative, which is not ideal for companies planning on working remotely.
• Bureaucratic procedures: The procedure for obtaining a license is very complicated, with a lot of formalities involved, such as filing documents in Polish and compliance with local regulatory requirements.
• Regulatory pressure: In recent times, Poland has been clamping down on the trading of cryptocurrencies, which might mean even more challenges for such companies.

The VASP license in Poland offers the entrepreneur the opportunity to conduct a legal activity in the world of cryptocurrencies, guaranteeing a series of advantages: recognition, flexibility, and the possibility for varied businesses. At the same time, unless you plan to work remotely or are not in Poland for a long period, bureaucratic procedures with necessary elements of local presence may stand in the way of the implementation of your project.

In order to take a license and operate your business successfully, one should be well-prepared to face the bureaucracy and comply with all regulatory norms in Poland. Here, Poland may become a reliable base for your cryptocurrency project in 2024.

VASP licence Bulgaria

Over the past years, active development of cryptocurrencies technologies was widely noticed, and many European countries try to adapt their legislations to new realities of a financial world. Bulgaria, though having the biggest number of companies with a VASP license, has a number of difficulties reducing its attractiveness for foreign investors willing to start a cryptocurrency project. The following paper will outline the main trends of VASP licensing in Bulgaria and the main obstacles that foreign entrepreneurs face in this jurisdiction.

VASP-licensing in Bulgaria

The status of a VASP operator in Bulgaria is certified by the Financial Supervision Commission that exercises regulation and supervision over all the virtual asset market players. For one company to get a licence it has to meet lots of criteria, such as having a real office in Bulgaria, certain capital and professional and financial management. It takes several months and even up to a year for a company to receive its licence, since one has to submit voluminous documentation and pass multilevel verification.

Challenges for foreign investors

In spite of the existence of a formal licensing mechanism, there are several aspects that may deter foreign investors from entering the Bulgarian jurisdiction:

1. Bureaucracy and administration delays: Processes for obtaining a VASP licence are often surrounded with bureaucratic difficulties and indefinite length administrative procedures, which may delay the deployment of a project indefinitely.
2. Lack of Special Conditions for Foreign Investors: Bulgaria does not provide special conditions or stimuli for foreign entrepreneurs, and that is why it is less interesting for them in comparison with other countries which actively develop the cryptocurrency infrastructure.

Considering what was said, Bulgaria is in a position to become a very good virtual currency hub; however, the bureaucratic and administrative barriers that exist noticeably reduce its attractiveness for foreign investors. What the country actually needs is the serious simplification of licensing procedures, accelerating administrative processes, and more favorable conditions for foreign entrepreneurs willing to work with virtual assets.

VASP licence Switzerland

Switzerland has already positioned itself as one of the most progressive countries in terms of cryptocurrency regulation due to its long-established reputation. While the country is considered friendly, getting a license for VASPs involves so many complexities and requirements that international entrepreneurs may become deterred from pursuing these matters. In this paper, we touched on several key topics surrounding the VASP licensing regime in Switzerland, some of the various requirements from applicants, and some potential limits for foreign investors.

Licensing of VASP in Switzerland

VASP licensing in Switzerland is done by the Financial Market Supervisory Authority of Switzerland, FINMA. The licensing process extends to a comprehensive review of the business model, funding sources, management structures, and internal control systems. To name a few of the most important pre-conditions for getting a license, it shall be necessary that:

• Authorized capital: The minimum authorized capital should be at least EUR 300,000. The same should be fully paid up and available for use.
• Local workers: It needs to establish at least three people residing and working in Switzerland.
• Local office: Having an office in Switzerland is one of the conditions it needs to face to show that the firm is present in Switzerland.
• Transparency and compliance: Companies will have to show absolute transparency and full compliance with relevant local and international laws, such as anti-money laundering and counter-terrorist financing laws.

Considering the obvious advantages of conducting a cryptocurrency business in Switzerland, there are several limitations such as, but not limited to the fact that:

1. High barrier to entry: High minimum authorized capital and the requirement for local employees is highly discouraging for start-ups and small businesses.
2. Long review process: The whole licensing application process may take as much as 8 months to complete, implying huge consumptions of time and resources.
3. Regulatory requirements: FINMA’s demanding governance and internal control requirements can go beyond the additional investment in systems and processes to drive up the overall cost of the project.

Switzerland continues to be one of the most attractive regions for cryptocurrency entrepreneurs due to its stable economic and political climate, as well as its advanced regulatory environment. The market is more suitable for big and medium enterprises who can afford high financial and administrative demands. Smaller organizations and start-ups are those who have to bear with more difficulties since their structure demands acute adherence to all the requirements, which may be elaborated with much attention and probably require alternative routes of entry into this market.

VASP licence in Dubai

The United Arab Emirates, and especially Dubai, have been actively establishing themselves as one of the world leaders for cryptocurrency and blockchain projects over the past years. Large international companies head to the region with great conditions for innovative virtual asset startups. In this article, we’ll describe how the VASP licensing system works in Dubai, which prospects it opens for business, and what kind of difficulties foreign entrepreneurs can face.

VASP licensing in Dubai

In order to establish a crypto-related business, you need to get a VASP license in Dubai. The procedure for obtaining it is regulated by UAE regulators who enforce compliance standards, internationally recognized, which makes the process of licensing quite strict but transparent.

Possible difficulties

However, for companies, there are also a few things to consider regarding the complications of it all:

• Regulatory complexity: High demands for compliance create greater administrative and financial burdens.
• Competition: The strong appeal of the market attracts numerous competitors which may make it hard for new companies to gain a foothold in the market.

Dubai, or the UAE for that matter, offers a great platform for crypto businesses with their openness to innovation, progressive regulation, and attractive tax environment. An application for a VASP licence is thus an important step towards commencing operations in the region, although complex, the benefits of doing business in the UAE can far outweigh the initial cost and effort.

VASP licence Cayman Islands

The Cayman Islands, undertaking attractive financial and tax policies, has taken a serious step toward the regulation of the cryptocurrency industry through the enactment of the Virtual Assets (Service Providers) Law 2020, hereinafter referred to as “the VASP Law.” This Act provided the groundwork regarding structuring and licensing of activities associated with cryptocurrency and blockchain. It hence set the rules of the game quite clearly for all market players. In this post, we scrutinize the key provisions of the VASP Law and what they mean for any cryptocurrency company looking to operate within the Cayman Islands.

Key Provisions of the VASP Act

The VASP Act was created to ensure greater transparency and security of virtual asset services and to prevent money laundering and financing of terrorism using cryptocurrency platforms. Following are the main areas it regulates in detail:

1. Licensing and registration: The VASPs of the Cayman Islands shall apply for the respective license with, and registration in, the Cayman Islands Monetary Authority. This covers not only custodial services but also trading platforms and any other type of service dealing in virtual assets.
2. Supervision and oversight: CIMA periodically supervises the activities of the licensed companies with a view to their observance of the legal requirements and standards.
3. AML/KYC compliance: Virtual asset businesses must correspond strictly to international and local requirements on anti-money laundering and customer authentication.

The business benefits from the VASP Act

The VASP Law clarifies a legal regime in the Cayman Islands and, for that reason, has become a catalyst of the following business advantages of cryptocurrency companies:

• Gaining greater investor confidence: Clear regulation increases confidence in Cayman-based cryptocurrency platforms, which are attracting international investors.
• The Code primarily protects the rights of the users by ensuring that the companies are highly transparent and responsible.
• A stable regime attracts innovation and the development of blockchain and cryptocurrencies.

Possible Challenges

On the other hand, however, the VASP Act will also present the following obligations and challenges to businesses:

• Stringent licensing and regulatory requirements may serve as one of the barriers to new and small businesses.
• Administrative and financial costs: Maintaining compliance with regulatory standards means huge resources, and especially for startups, it could turn into a financial headache.

The VASP Law of the Cayman Islands in 2020 presents a very important step toward a sustainable and secure crypto-currency ecosystem. It does this with the appropriate legal provisions that will not only help secure the market participants but also ensure growth in the blockchain and crypto-currency industry. Simultaneously, companies need to be ready for high standards and take responsibility for compliance to be able to operate in this jurisdiction.

VASP licence Hong Kong

Hong Kong, one of the major global financial centers, is actively working out its policy on cryptocurrency. A balance between the support of innovation on one hand and the assurance of consumer protection on the other has become a key challenge for Hong Kong regulators. The regulatory framework, including the Securities and Futures Ordinance and the Anti-Money Laundering and Countering the Financing of Terrorism Ordinance, establishes rigid control and supervision over the activities of cryptocurrencies. For this process, the central role is played by the Securities and Futures Commission – SFC. Below are some key discussions of cryptocurrency regulation in Hong Kong and the process of obtaining a VASP license in the country.

In this way, the VASP license in Hong Kong opens up huge business opportunities by creating an environment that is much more transparent and regulated to attract investment and build confidence in virtual asset platforms. However, from the perspective of companies, the biggest challenges lie in terms of exacting adhesion to strict regulatory standards and high demands in terms of internal control and risk management.

Hong Kong remains at the forefront of cryptocurrency regulation in the interest of investors and high standards in the sector. The VASP licensing system consequently represents a determinant for any cryptocurrency business to effectively conduct work in this fast-paced environment.

BVI VASP licence

The British Virgin Islands develop their legal framework with the aim of bringing virtual asset service providers into a legally regulated framework. This would create an environment for regulating those activities that would either protect consumers or create market stability while fostering innovation and making such a jurisdiction attractive to cryptocurrency companies. The paper will discuss the main provisions of the VASP law in the British Virgin Islands, providing at the same time a description of how the process of obtaining the relevant license is going to take place.

VASP Law in the British Virgin Islands

The VASP Law was brought into place with the motive of regulating those organizations that were involved in providing the following services related to virtual assets:

1. Providing Virtual Asset Services: virtual asset exchanges, transfers, and mediation and advice services concerning those.
2. Virtual Asset Custody Services: Any form of custodial services related to storing and managing cryptocurrency and other digital assets for clients.

VASP Licensing Procedure

The procedure of getting a VASP license within the British Virgin Islands is strictly bound by the regulatory requirements, taking a course through a number of critical steps:

1. Application: Legal entities apply for a license with the BVI regulatory agency, providing full details of their business-including a business plan, proof of AML/CFT policy observance, and information about the composition of ownership and management.
2. Verification and assessment: The regulator checks the completeness of the given information and assesses the applicant’s competencies in safely managing virtual assets and complying with the rule of law.
3. Licensing: Upon the applicant’s successful passing of inspection and found to comply with all requirements, a license is issued, and that applicant is allowed to operate freely and legally within the virtual asset space of the BVI.

Pros and Cons

Pros:

• Regulatory Clarity: In the BVI, the clear regulation of this operation boosts transparency of operations and instills confidence in customers and investors alike.
• Consumer protection: Stringent licensing requirements aim at protecting rights and funds of users. It means that an investment will be much safer.
• International recognition: the license obtained in such a respected and renowned jurisdiction as the BVI may add to the prestige and competitiveness of companies on the international market.

Challenges:

• Complexity of the process: getting a license requires serious investments of time and money in order to prepare and comply with all necessary requirements.
• Technical training: Companies need to ensure a high level of technical and safety training to meet the regulator’s standards.

VASP licensing in the British Virgin Islands provides companies with the opportunity to operate in a legally clearly regulated environment, facilitating the growth and development of the cryptocurrency industry. This not only improves the investment climate and provides investor protection, but also supports international standards in cryptocurrencies and blockchain.