Introduction
The regulation of Virtual Asset Service Providers (VASPs) in Europe has undergone significant transformation as the European Union (EU) implements Markets in Crypto-Assets Regulation (MiCA) and strengthens Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) laws. For cryptocurrency businesses, obtaining a VASP license is not just a regulatory obligation—it is essential for long-term credibility, operational stability, and access to financial infrastructure.
As financial authorities tighten oversight on digital assets, jurisdictions such as France, Germany, Lithuania, Estonia, and Malta have established national VASP licensing regimes, which will soon be aligned under MiCA’s pan-European framework. This guide provides a comprehensive analysis of the VASP licensing process, including its legal basis, regulatory requirements, AML/CTF obligations, approval process, and common challenges.
What is a VASP License?
A Virtual Asset Service Provider (VASP) license is a regulatory authorisation that allows cryptocurrency businesses to legally provide crypto-to-fiat exchanges, crypto custody, payment processing, token issuance, and other virtual asset-related services.
The Financial Action Task Force (FATF)Â defines a VASP as any entity that conducts one or more of the following activities:
Exchange services between virtual assets and fiat currencies
Crypto-to-crypto exchanges
Transfer of virtual assets
Custody and safekeeping of virtual assets
Participation in and provision of financial services related to ICOs or token issuances
VASPs are required to implement strict AML and CTF compliance frameworks, including customer due diligence (CDD), enhanced due diligence (EDD), transaction monitoring (TM), and suspicious activity reporting (SAR). The regulatory landscape in Europe is being standardised under MiCA, which will fully take effect by 2024, imposing uniform licensing requirements across all EU member states.
Why is a VASP License Necessary?
The VASP license is required for any crypto business that operates within Europe’s regulated financial ecosystem. Without proper registration, firms risk regulatory penalties, banking restrictions, and legal liabilities.
Obtaining a VASP license ensures:
Legal Compliance: Adherence to MiCA, 5AMLD, 6AMLD, and FATF’s Travel Rule.
AML & CTF Frameworks: Implementation of robust compliance programs.
Market Access: The ability to operate legally across 27 EU member states through passporting rights.
Banking & Payment Partnerships: A licensed status increases access to banking services, fiat on/off ramps, and institutional investment.
Investor & Consumer Protection: Demonstrates a commitment to regulatory best practices, increasing trust and credibility.
Key Regulatory Frameworks Governing VASP Licensing in Europe
1. Markets in Crypto-Assets Regulation (MiCA)
MiCA is the landmark EU regulation governing crypto-assets, VASPs, and stablecoins. It introduces EU-wide licensing requirements, replacing fragmented national regulatory approaches.
Key Provisions of MiCA:
Mandatory licensing for all VASPs operating in the EU
Comprehensive AML/CTF obligations
Investor protection and disclosure requirements
Regulatory oversight on stablecoin issuers and crypto asset service providers
2. Fifth and Sixth Anti-Money Laundering Directives (5AMLD & 6AMLD)
The 5AMLD (2020)Â introduced crypto businesses into the scope of EU AML laws, requiring registration, KYC, transaction monitoring, and SAR filings. The 6AMLD (2021)Â enhanced criminal liability provisions for financial crimes, making compliance breaches subject to severe penalties, including criminal charges.
3. Financial Action Task Force (FATF) Travel Rule
Under FATF guidelines, VASPs must share sender and receiver data for transactions over €1,000. Failure to implement the Travel Rule can result in regulatory enforcement actions and operational restrictions.
Where to Obtain a VASP License in Europe?
Several EU countries have already implemented national VASP licensing regimes, each with distinct requirements and advantages.
France
The Autorité des Marchés Financiers (AMF) requires VASPs to register under strict AML/CTF rules. France has one of the most compliance-intensive licensing processes, making it ideal for businesses seeking high regulatory credibility.
Germany
The BaFin (Federal Financial Supervisory Authority) requires VASPs to obtain a crypto custody license, which effectively classifies them as financial institutions. This is one of the most stringent regulatory frameworks in the EU.
Lithuania
Lithuania’s Bank of Lithuania (BoL) has a fast and cost-effective VASP registration process, making it a preferred jurisdiction for startups. Minimal capital requirements and efficient processing times make Lithuania a top choice for early-stage crypto firms.
Estonia
Previously one of the most crypto-friendly jurisdictions, Estonia has tightened its VASP licensing framework, requiring substantial AML controls and local operational presence.
Malta
The Malta Financial Services Authority (MFSA) operates one of the most detailed regulatory frameworks for VASPs, with a focus on investor protection, corporate governance, and compliance audits.
How to Obtain a VASP License: Step-by-Step Process
Pre-Application Preparation
Choose a jurisdiction based on business needs, costs, and regulatory complexity.
Draft a business plan, compliance framework, and AML/CTF policies.
Application Submission
Submit required corporate documents, operational plans, and compliance frameworks.
Undergo a Fit and Proper Test for key personnel.
Regulatory Review & Approval
Regulators conduct background checks, interviews, and risk assessments.
Some jurisdictions require an on-site inspection.
Ongoing Compliance & Reporting
VASPs must maintain AML/CTF reporting, financial audits, and transaction monitoring.
Common Challenges in VASP Licensing
Strict AML/CTF Compliance Requirements: Failure to implement robust KYC and transaction monitoring systems can lead to application rejection.
Banking & Payment Access Issues: Many banks remain hesitant to provide accounts to crypto firms.
Regulatory Delays: Processing times range from three months to over a year, depending on the jurisdiction.
Buckingham Capital Consulting: Leading Experts in Crypto Regulatory Compliance
Buckingham Capital Consulting is a specialised regulatory advisory firm with deep expertise in crypto-asset compliance, AML frameworks, and VASP licensing. With over 15 years of experience, we assist crypto businesses in navigating licensing complexities across Europe.
Our services include:
VASP licensing strategy and jurisdiction selection
Regulatory application drafting and submission
AML/CTF compliance program development
Regulatory interview and audit preparation
For further information, call us on 020 7866 2512, email us at info@buckinghamcapitalconsulting.co.uk, or visit our website at www.buckinghamcapitalconsulting.com.