VASP authorizations in reputable jurisdictions used to take 5-7 months, but you need to plan at least a year if not longer.

Why?

• Following the Terra/Lina/FTX fallouts, regulators will increase their scrutiny around customer funds, security team credibility, and fraud risk management before issuing new approvals. They will be developing additional criteria before granting approvals, which is why it will take longer.
• Some jurisdictions, even in Europe, did not actually have explicit mandatory requirements for customer funds segregation or 1:1 proof of reserves reporting requirements, which means, domestic laws will be adjusted and it will slow down new approvals.
• Banking partners, liquidity, and infrastructure providers will become more selective and discriminatory, especially if your VASP is established in the Bahamas, BVI, or another banana republic with a relatively lax regulatory regime.
• Scrutiny around token issuance will increase.
• DeFi and unhosted wallets will have harder times, unfortunately. This is the most absurd but very likely outcome because most regulators when in doubt resort to demanding and increasing centralized governance, external audits, or additional reporting. It will be harder (if not impossible) for a regulated VASP to move customer funds into DeFi protocols (even with the customer’s permission). In the past, many FinTech had to split fiat and crypto operations into two separate entities. From now on, it is very likely that we would have to split and insolate centralized services (fiat and crypto) from DeFi.

The good news is that VASP licenses or authorizations in reputable jurisdictions will become more valuable because they will be harder to get.

So, if you want to build a lasting crypto business with proper licensing and solid partnership arrangements, start applying at least 12 months in advance. Watch this recorded workshop on how to plan and execute your FinTech or Crypto licensing process to get started.

As always, if you need help, click reply, and let’s see how I can help you!