Comparing Crypto Regulatory Licenses For 2025
Which Licenses Offer the Clearest Rules?
We evaluated 11 crypto-asset licenses on eight aspects to see how plainly each license spells out its requirements.
We found the license with the most coverage of material aspects was UAE’s VARA license (83% license score). Licenses with the lowest coverage were VASP licenses and the Hong Kong TSCP (8%-21% score), as these licenses only really covered AML/KYC requirements and some audit requirements.
For the full breakdown and table, you can visit Counterparty Catalogue.
Now to be clear, this is not a risk rating of licenses. We are observing the clarity of licenses regarding certain operational aspects we believe are material. This is our opinion based on our research, and is not a risk recommendation.
We chose these licenses for this initial analysis based on data we collected on various crypto custodians. These were common licenses that popped up across custodians.
Background and Motivation
Trading counterparties and service providers love to tout their regulatory licenses. But a valid question when someone says they have obtained a certain license is “so what?”
What do regulatory licenses mandate for counterparties? Can an investor have some assurance that a license actually outlines requirements material to a digital asset operation?
Improvements
There are already a lot of ways this data can be improved, like more granularity in aspects evaluated. For example, the evaluation of Ops/Audit requirements really just looks at if requirements are clearly outlined - not what individual audits required are.
We’d like to hear from you on what you’d like to see. Let us know at info@digopp.group
Aspects and Scoring
We looked at each of the licenses to see if they cover the following aspects… again we are looking at the *clarity* of the requirement, and not our opinion on the quality of the requirement (if you’re interested in a table with opinions on security robustness, let us know):
1. Insurance – is insurance required?
2. Backup keys – are backups of key material required?
3. Control of keys – key material must be held by the licensed entity, or can third parties participate?
4. Ops/Audit – are there clearly defined audit requirements (can include technical, operational, or financial audits, but does not necessarily have to include all of those)?
5. Bankruptcy remote – do the guidelines outline that client assets must be bankruptcy remote from the licensed entity?
6. Asset segregation – do the guidelines outline how client assets should be segregated?
7. Cold/Hot Wallet – do the guidelines outline a framework for dividing client assets between hot or cold wallets.
8. AML/KYC – do the guidelines define how customer identity checks, monitoring, and record-keeping should be conducted?
We score each aspect based on their clarity with a 0-3 system:
0 = missing any guidance
1 = vague/voluntary
2 = mandatory but qualitative
3 = mandatory and explicit
Disclaimer
We, Digital Opportunities Group Enterprises Inc., are not providing investment or other advice. Nothing that we post on Substack should be construed as personalized investment advice or a recommendation that you buy, sell, or hold any security or other investment or that you pursue any investment style or strategy.
Case studies may be included for informational purposes only and are provided as a general overview of our general investment process. We have compiled our research in good faith and use reasonable efforts to include accurate and up-to-date information. In no event should we be responsible or liable for the correctness of any such research or for any damage or lost opportunities resulting from use of our data.
We are not responsible for the content of any third-party websites and we do not endorse the products, services, or investment recommendations described or offered in third-party social media posts and websites.
Nothing we post on Substack should be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product.