Definition:
Virtual Asset Service Providers (VASPs) are businesses that facilitate the exchange, transfer, or custody of digital assets, including cryptocurrencies and tokens.

Contextual Explanation:
VASPs must comply with financial regulations, including AML and Counter-Terrorist Financing (CTF) measures, to mitigate risks associated with digital asset transactions. Many jurisdictions, including Canada, require VASPs to register with regulators such as FINTRAC and implement transaction monitoring measures.

Why It Matters:
Regulators worldwide are enforcing stricter compliance requirements on VASPs due to concerns over money laundering and illicit financial activities in the crypto space. PSPs and financial institutions dealing with VASPs must ensure compliance with applicable regulations.

Example:
A cryptocurrency exchange operating in Canada must register as a VASP with FINTRAC and implement Suspicious Transaction Reporting (STR) procedures.