It Is Already 2025: Where Should Crypto Enterprises Apply for Licenses?

Applying for a license is a technical endeavor; choosing where to apply is an even more specialized task.

After more than a decade of unchecked growth, the crypto industry has entered a new era:Without a license, operations are virtually impossible.

From exchanges, wallets, and payment companies to OTC desks, custodians, staking services, and NFT platforms, any entity involved in the receipt, transfer, custody, or matching of virtual assets is essentially encompassed within the regulatory framework for “Virtual Asset Service Providers” (VASPs). This is not merely a trend; it is the current reality.

Regulators in major jurisdictions such as the European Union, Hong Kong, the United Arab Emirates, Singapore, and the Bahamas are simultaneously intensifying their efforts. Crypto businesses are transitioning from gray areas into institutionalized frameworks. Whereas the previous mindset was “issue tokens and move quickly,” the current imperative is “compliance first.”

 

What Is a VASP License? Why Is It Becoming Increasingly Important?

A VASP (Virtual Asset Service Provider) license is, in essence, a financial business permit for crypto enterprises. Issued by national financial regulatory authorities (such as central banks, financial management authorities, or securities commissions), it regulates the entire chain of activities ranging from exchanges, wallets, and payments to investment services.

Holding a VASP license signifies that:

• Your business complies with the jurisdiction’s standards for AML (Anti-Money Laundering), KYC (Know Your Customer), and CTF (Counter-Terrorist Financing);
• You may legally promote your business, solicit users, and conduct exchange and custody services;
• You can integrate with traditional financial systems, including banks, insurers, and payment providers, thereby securing cooperation and trust.

Companies without a VASP license not only fail to legally reach local customers but also risk fines, account freezes, or even forced shutdowns due to “unlicensed operations.”

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

 

What Are the Practical Benefits of Obtaining a License?

Many entrepreneurs view VASP licensing as a “cost center,” overlooking the fact that it constitutes a competitive barrier. Legalization is not merely a compliance issue; it is a business imperative.

1. Global Market Access (The “Passport” Effect)

Obtaining a license in an EU member state allows access to the entire European market via the “MiCA Passport.” Holding a license in the UAE, Hong Kong, or Singapore also facilitates connections with mainstream banks, payment processors, and investment institutions.

2. Brand and Trust Endorsement

A license is the most effective credential for building trust. Banks, insurers, venture capital firms, and custodians are willing to cooperate only with licensed entities;without a license, even opening a bank account becomes difficult.

3. Reduced Legal and Operational Risks

Licensed entities operate within a regulated framework, effectively isolating risks related to money laundering, fraud, and sanctions through KYC/AML mechanisms, while simultaneously enhancing internal governance, transaction security, and compliance review capabilities.

 

Which Businesses Must Hold a VASP License?

Nearly all B2B or B2C businesses that “touch crypto” may be classified as VASPs:

Most jurisdictions requireexchanges, custodial wallets, crypto payment services, OTC desks, funds, issuers, and payment gatewaysto obtain a VASP license or equivalent authorization,subject to local laws.

 

Comparison of VASP Licenses Across Major Global Jurisdictions

(I) No Mandatory License or Regulatory Gray Areas (Low Barrier to Entry)

For startup projects, structural entities, or those involved solely in on-chain technical services, some jurisdictions remain in a stage of having “no specific VASP legislation” or requiring only general anti-money laundering registration. While establishment in these regions is quick and low-cost, they do not provide comprehensive regulatory endorsement nor direct access to mainstream markets.

Costa Rica

There is no specific crypto legislation; companies are only required to comply with general AML/CFT obligations. The establishment process takes approximately 1–6 weeks, allowing for rapid launch.

Suitable for establishing technology development companies or international settlement layer entities.

The disadvantage is the lack of regulatory license support, making it difficult to obtain bank accounts.

Panama

Panama has long maintained a status of “no VASP regulation.” Financial regulatory authorities (SBP, SMV) have publicly stated that they lack regulatory authority over pure crypto transactions. Company establishment fees are low, there are no minimum capital requirements, and under its territorial tax system, offshore crypto income is tax-exempt.

However, this also implies a regulatory vacuum: companies must independently fulfill KYC, tax, and commercial compliance obligations.

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

Belize

There is no independent VASP framework; currently, only “financial institutions” are subject to AML supervision. The registration period is approximately 3–5 weeks, costs are low, and the tax regime is neutral.

However, the banking system is unfriendly to the crypto industry, making account opening difficult.

Suitable for on-chain service projects that do not involve token listings or fiat currency settlements.

Georgia

Crypto is legally recognized as an “asset,” but there is no specific VASP licensing regime.

Companies may register as ordinary commercial entities and fulfill general AML/KYC requirements.

With low local electricity prices and excellent digital infrastructure, it is a common location for mining, computing power, and node service companies.

Marshall Islands

The jurisdiction maintains an open attitude toward 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, entities must still establish their own AML policies to prevent obstacles in cross-border cooperation.

(II) Moderate Regulation (Clear but Flexible)

El Salvador

The first country globally to designate Bitcoin as legal tender. It offers two types of licenses:

• BSP (Bitcoin Service Provider):For BTC-related businesses;
• DASP (Digital Asset Service Provider):For other tokens.

Currently, Chivo Wallet, Strike, and others hold licenses.

Cayman Islands

Has a specific “VASP Act,” requiring submission of business plans, AML policies, audits, and background checks on management. The process is rigorous yet efficient, with low costs and a tax-neutral regime, making it suitable for international projects (BitMart, for example, is registered here).

British Virgin Islands（BVI）

The regulator is the FSC, operating under the “VASP Act.” The regulatory focus is on AML/KYC consistency. Last year, the project Portofino Technologies received approval.

Advantages: Clear regulation, good reputation, and ease of subsequent expansion.

Seychelles

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

Tax incentives are significant, but initial costs are higher, making it suitable for well-funded projects targeting institutional clients.

Bahamas

Regulated by the SCB under the “DARE Act.” Licensing requires physical offices, capital reserves, and AML systems.

However, with its tax-neutral status and strong infrastructure, it has attracted entities such as Tether, Bitfinex, and OKX to establish operations there.

(III) High Regulation (EU Framework)

If the Cayman Islands and BVI represent “flexible compliance,” then the European Union representsthe regulatory system with the clearest rules and highest thresholds.Any enterprise planning to operate within the EU or provide crypto services to EU users must comply with the Markets in Crypto-Assets (MiCA) regulation, which is soon to be fully effective.

The core logic of MiCA is:

“All Virtual Asset Service Providers (VASPs) are subject to unified regulation; obtaining a license in one jurisdiction allows operation across the entire EU.”

This means that once you obtain a VASP license in any member state, you can leverage the“EU Passport Right”to cover the entire EU market. This isthe only licensing mechanism with cross-border validity。

in the global crypto regulatory landscape.

• Regulatory CharacteristicsUnified Regulatory Standards:
• MiCA integrates crypto regulations across member states, covering all business forms including issuance, trading, custody, exchange, payments, and investment advisory;Mandatory AML/KYC Requirements:
• All VASPs must implement identity verification, risk control, and reporting obligations under the EU Anti-Money Laundering Directives (AMLD5/6);“Travel Rule” System:
• Requires traceability of identities for both parties in a transaction;Passporting Advantage:

Holding a license in one country allows compliant operations in all 27 member states, significantly improving market access efficiency. Although the application costs and compliance burden for an EU VASP license are indeed higher, it provides the most valuable global access rights. For teams aiming to serve European customers or seek long-term brand and institutional-level cooperation, the MiCA framework isa heavy-regulation pathway worth investing in.。

 

Three Key Dimensions for Consideration When Obtaining a License

Choosing the jurisdiction for a VASP license application is not about “going where it is cheapest,” but rather a comprehensive decision regardingmarket access, regulatory acceptance, and long-term sustainability.Empirically, judgments can be made based on three dimensions:

(I) Market Dimension: Where Your Customers Are, There the Regulation Applies

VASP licenses from different jurisdictions are not 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 on-ramps and off-ramps.

• If your customers are primarily inthe EU or the UK,you should choose a member state under the MiCA framework;
• if targetingAsian users,Hong Kong, Singapore, or the UAE are easier options for implementation;
• if you wish to establish aninternational holding or settlement center,the BVI, Cayman Islands, or Bahamas offer tax and structural advantages.

Regulatory “jurisdiction” is often determined by thelocation of customersrather than the company’s place of registration—meaning you cannot bypass regulation in major markets simply by registering in a lenient jurisdiction.

Practical Advice:First map out your fund and user flow (flow map), then decide on the licensing jurisdiction.

(II) Regulatory Dimension: Clear Rules Are More Valuable Than “Leniency”

Although establishment in low-barrier jurisdictions is fast, it is often rejected by banks and partners later due toregulatory ambiguity.In contrast, a jurisdiction with astable 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 Act (such as the Cayman VASP Act, BVI VASP Act, or EU MiCA)?

2. Compliance Supporting Requirements:Are AML policies, compliance officers, local personnel, and substantive office presence required?

3. Intensity of Ongoing Supervision:After license approval, are regular audit submissions, updated KYC reports, and maintenance of minimum capital required?

Regulatory clarity does not equal strictness.

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

Practical Advice:Prioritize jurisdictions with high regulatory transparency over those with the “loosest” regulation.

(III) Financial Dimension: Cost ≠ Application Fees, But Long-Term Compliance Expenses

Many teams mistakenly believe that licensing costs include only application and legal fees. In reality,the true cost lies in ongoing compliance and local maintenance.

Key cost elements 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 the regime is tax-neutral, whether withholding taxes apply, and whether double taxation can be avoided;
• Banking support: ease of opening operational accounts and accessing fiat channels.

Some jurisdictions have low initial fees but face operational hurdles later due to an “inability to secure banking support”; conversely, jurisdictions with mature regulation, though costly, yieldfinancial cooperation and capital trust.。

Practical Advice:Evaluate total costs across the four stages of “licensing – operations – financing – exit,” rather than focusing solely on the moment of license acquisition.

Summary:

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

Ideal Jurisdiction = Clear Regulation × Controllable Costs × Access to Target Markets × Willingness of Banks to Cooperate.

A VASP license is not merely an “entry permit”; it is the foundational configuration determining whether you can proceed steadily and sustainably in the future.

 

VASP: Not Just a License, But a Moat

In the past, crypto enterprises obtained licenses to “survive”; after 2025, licensed enterprises will holdthe keys to the financial system.。

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

The future crypto world will not be a golden age of unlicensed wild growth, but rathera new era of compliant operations, cross-border mutual trust, and institutional integration.

Projects that complete their license layouts early and streamline their structures and compliance systems will gain genuine competitive advantages in the next wave of policy developments.

Compliance is not a burden; it is a barrier.

Those who build their moats first will define the future market order.