CASP (Crypto Asset Service Provider)
What is CASP in crypto?
CASP (Crypto Asset Service Provider) is a regulatory term used to describe companies and individuals that offer services related to cryptocurrencies and other digital assets. CASPs include crypto exchanges, wallet providers, custodians, brokers, and other businesses involved in handling or managing crypto assets for clients.
The term CASP was officially introduced by European regulation MiCA (Markets in Crypto-Assets) to define and regulate the activities of companies operating in the crypto sector across the European Union.
Why is CASP important in crypto?
Defines regulated crypto businesses under MiCA and other legal frameworks.
Ensures consumer protection through licensing and oversight.
Establishes clear compliance requirements for companies offering crypto services.
Brings legitimacy and trust to the crypto industry.
Supports anti-money laundering (AML) and Know Your Customer (KYC) efforts.
What activities are covered under CASP?
Operating crypto exchanges (spot and derivatives).
Providing crypto custody and wallet services.
Offering crypto-to-fiat and crypto-to-crypto trading services.
Facilitating issuance and sale of crypto assets (e.g., ICOs, token sales).
Providing advice or portfolio management related to crypto assets.
Operating platforms for exchanging crypto assets and fiat money.
Examples of CASP services in crypto
Service | Description |
|---|---|
Crypto exchange | Platforms like Binance or Coinbase that allow buying and selling crypto. |
Custodial wallet service | Services that hold users’ crypto securely (e.g., BitGo, Fireblocks). |
OTC (Over-the-Counter) services | Private large-scale crypto trades outside public exchanges. |
Crypto brokerage | Facilitating buying/selling on behalf of clients. |
ICO/IEO launch platforms | Platforms that assist in token launches. |
Pros and Cons of CASP regulation in crypto
Pros | Cons |
|---|---|
Protects consumers through regulation | Can increase operational costs for providers |
Establishes trust and legitimacy in the market | May limit small or new crypto startups |
Reduces risk of scams and fraud | Potential reduction in anonymity for users |
Aligns crypto companies with financial regulations | Slower innovation in highly regulated markets |
Difference between CASP and traditional financial service providers
Aspect | CASP (Crypto Asset Service Provider) | Traditional Financial Services |
|---|---|---|
Assets handled | Cryptocurrencies, tokens, NFTs | Fiat currencies, stocks, bonds |
Regulation | Emerging regulations (e.g., MiCA in EU) | Established financial regulatory frameworks |
Technology | Blockchain, decentralized ledgers | Centralized banking systems |
Custody | Custody of private keys and crypto wallets | Custody of fiat accounts and securities |
Transaction speed | Near-instant via blockchain | Often slower, dependent on banking hours |
Examples of CASP under MiCA regulation
CASP Role | Example Company |
|---|---|
Crypto Exchange | Coinbase, Binance |
Custodian | Fireblocks, BitGo |
Crypto Brokerage | Kraken OTC, Genesis Trading |
Wallet Providers | Ledger (if offering connected services), Blockchain.com |
Issuance platforms | Platforms facilitating regulated token offerings. |
CASP and regulatory compliance requirements
Licensing from national financial regulators (under MiCA in EU).
AML and KYC procedures to prevent money laundering and terrorism financing.
Capital requirements to ensure solvency and reliability.
Transparency and disclosures for clients about services and risks.
Data protection and cybersecurity standards.
Governance and risk management frameworks.
Conclusion
CASP defines a regulated framework for companies offering crypto-related services, aiming to increase trust, transparency, and security in the crypto industry. As crypto adoption grows, CASP regulation like MiCA is expected to reshape how crypto businesses operate within Europe and beyond, offering clear rules that balance innovation and investor protection. For users and investors, understanding CASPs helps identify trusted, regulated service providers.
