The cryptocurrency business evolve rather rapidly in the modern world and the regulations of these virtual assets are becoming more widespread and detailed with significant concepts in modern crypto compliance such as CASPs (Crypto Asset Service Providers). CASPs are critical to maintain transparency, protecting customer rights and reduce financial crime risks in accordance with EU’s MiCA (Markets in Crypto-Assets Regulation) and FATF (Financial Action Task Force) recommendations.
What Is a CASP?
CASPs are crypto-related service providers on behalf of their clients which include crypto asset custody, executing orders on trading platforms etc. “CASP” as a term is defined under MiCA, the EU’s comprehensive cryptocurrency regulatory framework which set to be fully operational by 2025.
What Are the Services Offered by CASPs ?
There are activities that can categorize an entity as a CASP, which include these functions:
- Custody and Administration of crypto assets by storing and managing the wallets belonging to the customers.
- Operating Trading Platforms for crypto exchanges.
- Exchange Services that can be provided for crypto assets and flat currencies.
- Transfer of Crypto Assets between customers and accounts.
- Execution of Orders for clients in crypto asset markets or on trading platforms.
- Advisory Services for crypto assets such as giving financial advice about token investments.
Since these functions of CASPs are similar to traditional finance institutions, they are intermediaries in the crypto ecosystem of the global finance world.
CASPs Under MiCA Regulation (EU Focus)
According to MiCA regulations which sets certain standards for crypto operations in EU member states, CASPs in the EU have to be compliant with several obligations by 2025.
Key Requirements for CASPs under MiCA
1. Licensing: CASPs need to register and obtain a license with their national competent authority to operate in the EU which can ensure that CASPs meet required standards for integrity and consumer protection.
2. Capital Requirements: To ensure financial resilience and stability, CASPs have to meet minimum capital requirements, ranging between €50,000 and €150,000 based on the type of service.
3. AML/KYC Obligations: Anti-Money Laundering (AML) and Know Your Customer (KYC) rules such as customer due diligence, suspicious transaction reporting and monitoring are applied to CASPs as well just like they do to other financial institutions.
4. Consumer Protection: To help customers make informed decisions about services and investments, CASPs have to be transparent and provide clear terms for disclosures.
5. Operational Requirements: Under MiCA regulations, strict cybersecurity measures, efficient handling of complains and governance frameworks have to be handled by CASPs to ensure smooth operational functioning.
Global Perspective on CASPs and the FATF
The Financial Action Task Force (FATF) uses a broader term called VASPs (Virtual Asset Service Providers) to describe CASPs worldwide as FATF encourages EU-member countries to mandate the Travel Rule, which requires CASPs to collect and share details about crypto transactions exceeding $1,000.
AML & KYC Obligations for CASPs: How Compliance is Achieved
Our experts agree that CASPs need efficient AML programs since they are an important part of CASP operations to prevent financial crimes. Some of the key elements are:
Customer Due Diligence (CDD): Verifying the customers using resources like government-issued IDs or other official documents and assessing risks regarding the customers such as their location and source of funds to meet regulatory requirements.
Ongoing Monitoring: Every customer activity needs to be constantly monitored to detect unusual patterns which includes tracking transactions, analyzing frequency and identifying any deviations to reduce risks of fraud and money laundering.
Suspicious Transaction Reports (STRs): STRs are prepared when any suspicious or unusual activity is identified such as unexplained transactions and inconsistent behavior with the customer profile are reported, therefore, STRs are critical to prevent finance crimes and ensure transparency.
Sanctions Screening: Companies need to make sure that there are no connections with sanctioned or blacklisted individuals, organizations or entities to avoid penalties and follow international regulations by checking sanctions lists regularly.
Transaction Monitoring: A variety of different tech tools and algorithms may be employed to analyze transaction flows for illicit activities or to detect any suspicious activity in customers’ transaction histories such as unusual amount of money transfers, rapid movement of funds etc.
Growth of CASPs Worldwide
CASPs are expanding globally due to increasing number of regulatory frameworks to ensure consumer protection and countries worldwide now adopt varied approaches to CASPs from licensing systems to strict regulatory controls. In our opinion, this expansion is a significant step in encouraging transparency and facilitating the growth of digital asset ecosystem with minimum risks.
| Country | Licensing Authority | CASP Status |
| EU | National regulators under MiCA | Mandatory license |
| UK | FCA | Registere d as cryptoass et firms |
| Singapore | MAS (under PSA) | License required |
| USA | FinCEN + SEC/ CFTC | Money Services Business + securities law |
| Japan | FSA | Full licensing, stringent controls |
| UAE | VARA & ADGM | Progressive licensing in crypto hubs |
Common Challenges CASPs Face
1. Navigating Multi-Jurisdictional Licensing
To operate a CASP across several jurisdictions, compliance with regulatory frameworks with their own specific requirements is necessary. This may create complexities and challenges for organizations as they have to manage conflicts and obtain costly licenses to handle regulations.
2. Meeting Technical Compliance (e.g., Travel Rule)
Technical compliance standards, such as the Travel Rule, have to be followed by secure transmission of information about crypto transfers and well-configured systems to face with significant operational and technical challenges.
3. Managing Cross-Border Risk
It is no doubt that cross-border transactions are important for global operations but they can also expose CASPs to risks such as managing regulatory expectations, potential sanctions and client risks in varying levels of financial oversight. These risks require efficient risk management strategies to maintain operational efficiency at its best.
4. Integrating Real-Time AML Tools
For efficient real-time monitoring and reporting according to anti-money laundering (AML) requirements, CASPs should integrate advanced compliance tools to their systems since companies often face problems regarding the adaptation of these tools.
Tools Supporting CASPs in 2025
As Sanction Scanner, we provide indispensable compliance tools for CASPs.
Features of Sanction Scanner for CASPs:
Real-Time Screening: Verifying whether customer profiles and transactions comply with sanctions and politically exposed persons (PEP) lists which can help businesses avoid penalties and maintains trust.
Automated Travel Rule Compliance: FATF (Financial Action Task Force) guidelines may result in complex processes for organizations to deal with but Sanction Scanner can simplify them to ensure the smooth sharing of sender and recipient information during transfers.
Detailed Reports: Sanction Scanner can prepare comprehensive and accurate reports for regulatory inspections which may save companies time and effort to a great extent.
Transaction Monitoring: Identifying suspicious activities and monitoring transactions to provide detailed analyses for companies to help them reduce risks before they escalate.
API Integration: It can be integrated into existing infrastructure such as crypto exchanges, custodians and other platforms to offer facilitative compliance solutions without disrupting the workflow
FAQ's Blog Post
A CASP is a business or individual offering services related to cryptocurrencies, such as exchange, custody, or transfer of digital assets. They are regulated under frameworks like the EU’s MiCA regulation.
CASPs may offer crypto-to-fiat or crypto-to-crypto exchange, wallet custody, and transfer services. Some also provide advisory or issuance services for digital assets.
Yes, CASPs must comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations in most jurisdictions. In the EU, they are specifically regulated under the Markets in Crypto-Assets (MiCA) framework.
In most countries, CASPs must register or obtain a license from the financial authority before offering services. Requirements vary depending on the jurisdiction.
They must verify customer identities, monitor transactions, and report suspicious activities. Compliance is enforced through Know Your Customer (KYC) and ongoing monitoring obligations.
CASP is the term used in the EU under MiCA, while VASP (Virtual Asset Service Provider) is used in FATF recommendations and some other countries. Both refer to similar service providers with compliance obligations.
Yes, under MiCA, once authorized in one EU member state, a CASP can passport its services to other member states without separate licenses.
They provide secure and regulated access to crypto markets, helping prevent fraud and money laundering. CASPs also build trust between consumers and the crypto ecosystem.
