VASP Licensing Framework

Definition ∞ A VASP licensing framework is a regulatory system that requires Virtual Asset Service Providers to obtain official authorization to operate within a jurisdiction. This framework establishes the legal and operational requirements that entities dealing with cryptocurrencies, such as exchanges, custodians, and transfer services, must satisfy to conduct business. It typically includes provisions for anti-money laundering (AML), counter-terrorist financing (CTF), cybersecurity, and consumer protection. The objective is to bring digital asset service providers under regulatory oversight, mitigating risks associated with illicit finance and market instability. This system ensures accountability and transparency in the digital asset sector.
Context ∞ The implementation of VASP licensing frameworks is a global trend, driven by international standards from bodies like the Financial Action Task Force (FATF). Debates often concern the scope of activities requiring a license and the burden of compliance on smaller entities or decentralized protocols. Tracking new national regulations and their enforcement provides critical context for understanding the evolving regulatory landscape for digital asset businesses worldwide.