In the evolving world of digital assets, obtaining a virtual asset service provider (VASP) license has become increasingly complex. According to blockchain security firm CertiK, robust security measures are proving to be a key factor in accelerating regulatory approvals. Their latest analysis highlights how proactive security infrastructure can help firms navigate licensing hurdles more efficiently and avoid common delays.
Regulators worldwide scrutinize several critical security areas when evaluating VASP applications.
These include thorough audits of smart contracts and code, ensuring that reviews are conducted by independent experts on the actual production environment rather than test versions.
Evidence of vulnerability fixes is often mandatory, with some authorities demanding ongoing surveillance of deployed code.
Custody solutions receive close attention, particularly the balance between cold and hot storage—frequently requiring high percentages of assets in secure offline environments.
Firms must provide detailed documentation on key generation ceremonies, multi-signature or multi-party computation setups, role separations, and recovery protocols. Insurance policies aligned with asset values are also evaluated.
Transaction surveillance systems must demonstrate real-time detection of suspicious activities, including tracing funds across blockchains and screening for sanctions compliance.
Many regulators expect live demonstrations of these tools integrated with anti-money laundering (AML) policies, including support for data transfer requirements like the Travel Rule.
Additionally, comprehensive penetration testing covering not just websites but also APIs, infrastructure, and smart contracts is essential.
Regulators are increasingly dismissing superficial or boilerplate assessments from unqualified providers.
A well-documented incident response and business continuity plan, complete with tested exercises and clear escalation procedures, rounds out the expectations.
CertiK notes that inadequate security documentation is the primary cause of stalled applications.
Applicants often falter by submitting audits that don’t match live deployments, lacking procedural evidence for key management, or having monitoring tools that exist only on paper without operational workflows.
Recent regulatory trends underscore this emphasis. Global AML-related fines skyrocketed by 417% in the first half of 2025, totaling $1.23 billion.
Authorities are broadening the scope of required audits to encompass the entire technical stack and are more stringent about the quality of third-party assessments.
To optimize the process, CertiK advises integrating security planning from day one rather than as an afterthought.
They suggest a phased approach: initial gap analysis and vendor selection early on, followed by audits and integrations, remediation efforts, and finally compiling evidence packages including suitable insurance coverage.
Once licensed, VASPs face continuous obligations such as periodic reassessments and prompt incident reporting.
Maintaining strong security not only ensures compliance but also serves as a competitive differentiator, potentially shortening review periods and signaling operational maturity to stakeholders.
CertiK concluded that as licensing frameworks mature, embedding security deeply into operations from the outset is no longer optional but a strategic necessity for swift approval and long-term success in the virtual asset sector.