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VASP License: Do You Really Need One to Run Your Crypto Business?

Introduction

You’ve got the idea, the team, and maybe even the funding. You want to launch your crypto exchange, custody platform, or digital wallet service. But then comes the question that keeps founders awake at night: Do I really need a VASP license to start?

Many entrepreneurs think they can operate without one — until regulators knock on their door. In today’s fast-changing crypto landscape, the VASP (Virtual Asset Service Provider) license isn’t just a piece of paper. It’s the difference between a trusted business and one that might get shut down overnight.

The Risk of Operating Without a License

Imagine this: you launch your exchange, attract users, and suddenly your bank freezes your account because you don’t have the proper license. Or worse, your customers lose funds and you face legal action.

Here are the real risks of skipping a VASP license:

  • Banking restrictions: Most banks won’t work with unlicensed crypto companies.
  • Customer distrust: Serious investors prefer platforms with recognized licenses.
  • Legal penalties: In many countries, offering crypto services without a license is a criminal offense.
  • Scaling limits: Without a license, it’s nearly impossible to partner with global payment providers or issue crypto cards (加密卡).

What Is a VASP License?

A VASP license is a regulatory approval required for companies that deal with virtual assets. Depending on the jurisdiction (Hong Kong, El Salvador, Switzerland, Canada, etc.), a VASP license may cover:

  • Crypto exchanges (centralized or decentralized)
  • Custody/wallet providers
  • OTC trading desks
  • Payment providers and crypto card issuers
  • Token issuance and related services

In some regions, you might also see the term CASP (Crypto Asset Service Provider) used interchangeably.

Why Regulators Created VASP Licensing

The crypto market grew so fast that regulators had to catch up. The Financial Action Task Force (FATF) set global standards requiring countries to regulate Virtual Asset Service Providers.

The main goals of VASP licensing are to:

  • Prevent money laundering (AML) and terrorist financing (CFT)
  • Protect consumers from fraud and scams
  • Build trust in the financial system
  • Encourage innovation within a safe legal framework

Who Actually Needs a VASP License?

Not every blockchain project requires one. For example, if you’re developing a DeFi protocol or building an NFT game, you may not need licensing (yet). But if your business involves handling customer funds or facilitating transactions, you almost certainly do.

Businesses that typically require a VASP license:

  • Centralized and hybrid exchanges
  • Custodial wallet providers
  • Companies issuing or managing stablecoins
  • Firms offering crypto payment services (including EMI + crypto card models)
  • OTC desks handling large institutional trades

The Benefits of Being Licensed

Yes, licensing takes time and money. But here’s what you gain:

  • Banking access: Licensed businesses have better chances of securing local and international banking partners.
  • Investor trust: A license signals that you meet regulatory and compliance standards.
  • Market expansion: Many jurisdictions only allow licensed firms to operate legally.
  • Survivability: When regulators tighten the rules (and they will), licensed firms can keep growing while others shut down.

Think of the license not as a burden, but as your passport to global growth.

Common Misconceptions About VASP Licenses

  • “I can just register offshore and skip compliance.”
    Wrong — regulators now collaborate globally. Even if you register abroad, you’ll face restrictions when dealing with banks or investors.
  • “It’s too expensive for startups.”
    In some jurisdictions (like El Salvador or Canada MSB), the cost is much lower compared to Switzerland or Singapore. Options exist for different budgets.
  • “Crypto is unregulated, so I don’t need a license.”
    This was true years ago. Today, operating without compliance is one of the fastest ways to lose credibility.

Conclusion

So, do you really need a VASP license to run your crypto business? The short answer is: if you plan to handle funds, build trust, and scale globally — yes.

Skipping the license may seem cheaper in the beginning, but the hidden costs of lost banking access, investor distrust, and legal risks can be devastating.

If you’re serious about your crypto business, think of a VASP license as an investment in long-term survival and growth.