The term VASP (Virtual Asset Service Provider) was introduced by the FATF to describe those firms that perform services relating to VAs, i.e., cryptocurrencies and other blockchain assets. The term creates a new category of a financial service provider that can be subject to regulatory oversight. VASP is a business that conducts one or more of the following actions on behalf of its clients:

exchange between virtual assets and fiat currencies;

exchange between one or more forms of virtual assets;

transfer of virtual assets;

safekeeping and/or administration or virtual assets or instruments enabling control over virtual assets;

participating in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset

This definition encompasses a range of crypto businesses, including bitcoin exchanges, ATM operators, wallet custodians, and hedge funds. FATF further recommends that VASPs be subject to the same stringent AML/CTF and KYC requirements as traditional financial institutions.