This article is reprinted with permission from Mankun Blockchain Legal Services, author: Shao Jiadian, copyright belongs to the original author.

The cryptocurrency industry, after more than a decade of wild growth, has entered a new era: without a license, it is difficult to move forward.

From exchanges, wallets, payment companies, to OTC, custody, Staking, and NFT platforms, as long as it involves the receipt, transfer, custody, or matching of virtual assets, it is basically regulated under the "VASP (Virtual Asset Service Provider)" framework. This is not a trend, but a reality.

In major jurisdictions such as the European Union, Hong Kong, the UAE, Singapore, and the Bahamas, regulators are synchronously ramping up efforts, and crypto businesses are moving from the gray area to institutionalization. If it was previously "issue coins and run," now it is "compliance first."

The VASP (Virtual Asset Service Provider) license is essentially a financial business license for crypto enterprises. It is issued by the financial regulatory authorities of various countries (central banks, financial management bureaus, securities regulatory commissions, etc.) to manage the full chain of activities from exchanges, wallets, payments to investment services.

Holding a VASP license means:

• Your business complies with the jurisdiction's AML (Anti-Money Laundering), KYC (Know Your Customer), and CTF (Counter-Terrorism Financing) standards;
• You can legally promote your business, attract users, and conduct exchange and custody services;
• You can connect with traditional financial systems such as banks, insurance, and payments, gaining cooperation and trust.

Companies without a VASP license not only cannot legally reach local customers but may also face fines, account freezes, or even forced shutdowns for "operating without a license."

In short, the VASP license has become a passport and amulet for crypto enterprises.

Many entrepreneurs view VASP as a "cost center," overlooking that it is actually a competitive barrier. Legalization is not just a compliance issue, but also a business issue.

1. Global Market Access (Passport Effect)

Obtaining a license from an EU member state allows you to operate across the entire European market with the "MiCA passport"; holding a license in the UAE, Hong Kong, or Singapore also means you can connect with mainstream banks, payment, and investment institutions.

2. Brand and Trust Endorsement

Licenses are the most effective proof of trust. Banks, insurance, VCs, and custodians are only willing to cooperate with licensed institutions; without a license, even opening an account is difficult.

3. Reducing Legal and Operational Risks

Licensed enterprises operate within the system and can effectively isolate money laundering, fraud, and sanction risks through KYC/AML mechanisms, while also improving internal governance, transaction security, and compliance review capabilities.

Almost all B-end or C-end businesses that "touch coins" may be defined as VASP:

Most jurisdictions require exchanges, custodial wallets, crypto payments, OTC, funds, issuers, payment gateways, and other entities to obtain VASP or equivalent licenses, depending on local laws.

(a) No Mandatory License or Regulatory Gray Area (Low Threshold Establishment)

For startup projects, structural companies, or entities that only involve on-chain technology services, some jurisdictions are still in the stage of "no specific VASP law" or "only requiring general anti-money laundering registration." These regions have short establishment cycles and low costs but cannot provide complete regulatory endorsement and cannot directly serve the mainstream market.

Costa Rica

No specific crypto law, only requires companies to comply with general AML/CFT obligations. Establishment process takes about 1–6 weeks, allowing for quick initiation.

Suitable for establishing technology development companies or international settlement entities.

The downside is: without regulatory license support, it is difficult to obtain a bank account.

Panama

Has long maintained a "no VASP regulation" status. Financial regulatory authorities (SBP, SMV) have publicly stated that they have no regulatory authority over pure crypto transactions. Company establishment costs are low, with no minimum capital requirements, and under local tax systems, offshore crypto income is tax-exempt.

But it also means a regulatory vacuum: companies must fulfill KYC, tax, and business compliance on their own.

Suitable for registering holding companies, cross-border settlement SPVs, and DAO foundation holding layers.

Belize

No independent VASP framework, currently only implements AML supervision for "financial institutions." Registration cycle is about 3–5 weeks, low cost, and tax-neutral.

However, the banking system is not friendly to the crypto industry, making account opening difficult.

Suitable for on-chain service projects without token issuance or token settlement.

Georgia

Crypto is legally recognized as "assets," but there is no specific VASP licensing system.

Companies can register as ordinary business entities and fulfill general AML/KYC requirements.

Local electricity prices are low, and digital infrastructure is excellent, making it a common establishment location for mining, computing power, and node service companies.

Marshall Islands

Open attitude towards DAOs and blockchain enterprises, with no specific VASP license. The government recognizes the "DAO legal entity (DAO LLC)" form, allowing for on-chain company registration.

Suitable for DAO governance layers, on-chain organization registration, or token issuance SPVs.

However, it is still necessary to establish AML policies to prevent cross-border cooperation from being hindered.

(b) Moderate Regulation (Clear but Flexible)

El Salvador

The first country in the world to designate Bitcoin as legal tender. It has two types of licenses:

BSP (Bitcoin Service Provider): for BTC business;

DASP (Digital Asset Service Provider): for other tokens.

Currently, Chivo Wallet, Strike, and others are licensed.

Cayman Islands

Has a specific "VASP Act," requiring the submission of a business plan, AML policy, audit, and management background checks. The process is rigorous but efficient, with low costs and a tax-neutral system, suitable for international projects (BitMart is registered here).

British Virgin Islands (BVI)

The regulatory authority is FSC, following the "VASP Act." The regulatory focus is on AML/KYC consistency. Last year, the project Portofino Technologies was approved.

Advantages: clear regulation, good reputation, and easy subsequent expansion.

Seychelles

The VASP Act covers exchanges, wallets, brokers, ICO/NFT registration.

Tax incentives are significant, but initial costs are relatively high, suitable for well-funded, institution-oriented projects.

Bahamas

Regulated by SCB, licenses are issued under the "DARE Act." Requires physical office, capital, and AML systems.

However, it is tax-neutral and has strong infrastructure, attracting Tether, Bitfinex, OKX, and others to establish operations.

(c) High Regulation (EU System)

If the Cayman Islands and BVI represent "flexible compliance," then the EU has the clearest rules and the highest regulatory thresholds. Any enterprise planning to operate within the EU or provide crypto services to EU users must comply with the soon-to-be-fully-effective "MiCA" (Markets in Crypto-Assets, EU Crypto Asset Market Regulation).

The core logic of MiCA is: "All virtual asset service providers (VASPs) are subject to unified regulation, and obtaining a license in one jurisdiction allows operation across the entire EU."

This means that as long as you obtain a VASP license in any member state, you can cover the entire EU market with the "EU Passport Right." This is the only licensing mechanism in the global crypto regulatory system that has cross-border effectiveness.

Regulatory Features

Unified regulatory standards: MiCA integrates the crypto regulations of member states, covering all business forms including issuance, trading, custody, exchange, payment, and investment advisory;

Mandatory AML/KYC requirements: All VASPs must implement identity verification, risk control, and reporting obligations under the EU's Anti-Money Laundering Directive (AMLD5/6) framework;

"Travel Rule" system: requires the identities of both parties in a transaction to be traceable;

Passport system advantages: holding a license from one country allows compliant operation in 27 member states, greatly enhancing market access efficiency.

The application costs and compliance burdens for the EU VASP license are indeed higher—but it provides the most valuable access rights globally. For teams looking to serve European customers or seeking long-term brand and institutional-level cooperation, the MiCA framework is a worthwhile investment in a heavily regulated route.

Choosing which jurisdiction to apply for a VASP license is not simply about "going where it's cheap," but a comprehensive decision regarding market access, regulatory acceptance, and long-term sustainability. Experience suggests that it can be judged from three dimensions:

(a) Market Dimension: Where are your customers, the regulation is there

Different jurisdictions' VASP licenses are not all freely usable across borders.

You must clarify: who your target users are, where your main customer base is located, and whether your business involves fiat currency inflows and outflows.

If your customers are mainly in the EU or the UK, you need to choose a member state under the MiCA framework;

If targeting Asian users, Hong Kong, Singapore, or the UAE are easier to establish;

If you wish to establish an international holding or settlement center, BVI, Cayman, and Bahamas have tax and structural advantages.

The actual "jurisdiction" of regulation is often based on the source of customers rather than the place of company registration—this means you cannot bypass the regulation of major markets by registering in lenient areas.

Practical advice: first draw your funding and user flow map, then decide on the license issuance location.

(b) Regulatory Dimension: Clear rules are more valuable than "leniency"

While establishing in low-threshold areas is quick, it often leads to rejection by banks and partners later due to regulatory ambiguity. In contrast, a jurisdiction with a stable regulatory framework and transparent approval standards can enhance brand credibility and subsequent expansion efficiency.

Focus on three key questions:

1. Regulatory maturity: Is there a specific VASP law (e.g., Cayman VASP Act, BVI VASP Act, EU MiCA)?

2. Compliance supporting requirements: Are AML policies, compliance officers, local personnel, and substantial office required?

3. Ongoing regulatory intensity: After the license is approved, is there a need to regularly submit audits, update KYC reports, and maintain minimum capital?

Clear regulation ≠ strict.

It means you can operate stably under clear game rules, rather than passively adjusting due to policy fluctuations.

Practical advice: prioritize jurisdictions with high regulatory transparency, rather than the most "lenient" ones.

(c) Financial Dimension: Cost ≠ Application Fee, but rather long-term compliance expenses

Many teams mistakenly believe that the cost of obtaining a license only includes application and legal fees. In reality, the true cost is ongoing compliance and local maintenance.

Key cost factors include:

Initial establishment costs: registration fees, legal fees, compliance consultant fees;

Ongoing compliance costs: annual audits, AML reports, compliance officer salaries, local leasing;

Tax environment: whether it is tax-neutral, whether there are withholding taxes, and whether double taxation can be avoided;

Banking Support: Can you easily open operational accounts and access fiat channels?

Some jurisdictions may have low initial costs, but later face operational obstacles due to "inability to obtain bank support"; conversely, jurisdictions with mature regulations may have higher costs but can lead to financial cooperation and capital trust.

Practical Advice: Consider the total cost from the four stages of "licensing—operation—financing—exit," rather than just focusing on the moment of obtaining the license.

Summary:

Choosing a license is not about finding the cheapest option, but about finding the most suitable ecosystem.

Ideal Jurisdiction = Clear Regulation × Controllable Costs × Ability to Connect with Target Market × Willingness of Banks to Cooperate.

The VASP license is not just an "entry permit," but also a foundational configuration for whether you can move steadily and far in the future.

In the past, crypto enterprises obtained licenses to "survive"; after 2025, licensed enterprises will receive the keys to the financial system.

The VASP license is not just a regulatory requirement; it is becoming a new international financial language—banks, payment institutions, funds, and family offices all use it to assess whether you are "worthy of cooperation."

The future of the crypto world will not be an era of unlicensed wild running, but a new era of compliant operations, cross-border mutual trust, and institutional connections.

Projects that complete their licensing layout, streamline their structures, and compliance systems in advance will gain true competitive advantages in the next wave of policy changes.

Related: Crypto Bank AMINA Obtains Hong Kong License to Launch Institutional Trading

Original: “2025 Global VASP Licensing Map: Where Should Crypto Firms Seek Licenses?”

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