As digital money becomes more common — from cryptocurrencies to stablecoins — the companies behind those services are stepping into the spotlight. These companies are commonly identified as Virtual Asset Service Providers, or VASPs.
If you've ever bought or sold crypto through an exchange, or interacted with platforms that facilitate token transfers, chances are you've already dealt with a VASP — even if you didn’t know it. However, not every service in the ecosystem is a VASP. For example, wallets that are purely self-custodial often function more as infrastructure providers rather than regulated financial entities. And while some money transfer apps may handle tokens, they may not necessarily fall under a VASP definition unless they engage in regulated activities like exchange or custody.
Not All VASPs Are Equal
The world of VASPs is fast-growing but still maturing. Some platforms operate in highly regulated environments, while others exist in legal grey zones. And history shows us that not every provider can be trusted — scams, hacks, and platform collapses have all happened in recent years.
That’s why it’s critical to recognize the signs of a trustworthy VASP. As the rules continue to evolve, it's just as important to learn from past failures and assess VASPs based on how they operate, not just what they claim.
What Is a VASP, in Simple Terms?
A VASP is typically defined as any business that provides services involving the exchange, transfer, or safekeeping of digital assets. These may include:
- Crypto exchanges (where users buy, sell, or trade coins)
- Custodial wallet providers (where the company holds your private keys)
- Token transfer platforms (that let you send or receive digital assets, often internationally)
- Certain fintech or DeFi platforms (that integrate stablecoin or crypto-based payments)
Whether a service qualifies as a VASP depends on both its functionality and the local laws in its operating jurisdictions. Many wallets, for instance, are simply tools — but once custody, exchange, or user onboarding is involved, the lines can blur.
5 Signs a VASP May Be Trustworthy
Here are five indicators to assess a VASP — not as a guarantee, but as part of an informed evaluation.
1. Regulatory Status
Ideally, a reliable VASP should be licensed or registered with a recognized authority — such as MAS (Singapore), FCA (UK), or a local crypto registry. But licensing alone is not enough:
- Major platforms like Binance have faced scrutiny even without local licenses in every market.
- Some regions don’t yet have comprehensive VASP frameworks, allowing large players to operate under lighter supervision.
Licensing helps — but it’s only one piece of the puzzle.
2. Strong Identity and Risk Controls
Trustworthy VASPs usually implement robust KYC (Know Your Customer) and AML (Anti-Money Laundering) protocols. This goes beyond just uploading an ID:
- They use biometric tools, AI behavior analysis, and risk-scoring systems
- Transactions are monitored for suspicious patterns, not just at onboarding but in real time
- Good KYC processes protect both the platform and its users
3. Operational Transparency
While transparency is a good sign, many VASPs are still vague about how they operate. Truly open platforms will explain:
- How user funds are stored — especially whether custodial or non-custodial
- Whether they hold reserves (and if those reserves are audited)
- What risk policies they follow, especially in lending or staking
A clear terms of service and regular disclosures can help users understand what they're really signing up for.
4. Real Security, Not Just Marketing Words
You may see claims like “military-grade encryption” or “bank-level security” — but what really counts is action. A secure VASP will:
You may see claims like “military-grade encryption” or “bank-level security” — but what really counts is action. A secure VASP will:
- Get independent security audits
- Store most funds in offline cold storage (harder for hackers to reach)
- Have systems to recover data during emergencies
5. Cross-Border Functionality (Optional, Not a Standard)
Not all VASPs are designed for cross-border use — and not all need to be. However, for users in regions like Southeast Asia or Africa where remittances and transfers are critical, it helps when a platform:
Not all VASPs are designed for cross-border use — and not all need to be. However, for users in regions like Southeast Asia or Africa where remittances and transfers are critical, it helps when a platform:
- Supports local fiat on/off ramps
- Offers regional language support
- Complies with international standards like FATF guidelines
That said, cross-border operability is a bonus, not a baseline requirement — and many compliant VASPs still focus only on domestic markets.
Trust Is the Real Currency
A flashy interface or low fees mean little if the platform can’t keep your assets safe. At its core, a reliable VASP is more than just a tech provider — it's a financial partner that values security, compliance, and user trust.
As regulation catches up and standards become clearer, users should not just rely on big brand names or marketing claims. Instead, look at what the platform actually does — how it handles risk, how it protects users, and how it responds when things go wrong.
The more you know, the better choices you can make — and in this space, awareness is one of your best defenses.