Crypto Asset Service Providers: Risks, Regulation, and Global Licensing Developments

The Bank for International Settlements (BIS) has released a new analysis examining cryptoasset service providers (CASPs) as financial intermediaries, highlighting their growing role in the digital asset ecosystem and the associated risks that require tailored policy responses. The report, published in April 2026, evaluates how CASPs function similarly to traditional financial intermediaries by facilitating transactions, providing custody, and enabling access to crypto markets, while operating in a regulatory landscape that remains fragmented across jurisdictions.

The BIS analysis identifies several key risks stemming from the intermediation activities of CASPs, including operational vulnerabilities, cyber threats, liquidity mismatches, and the potential for contagion to broader financial systems. It notes that unlike traditional banks, many CASPs are not subject to equivalent prudential standards, such as capital or liquidity requirements, which increases their susceptibility to shocks. The report emphasizes that the decentralized and often cross-border nature of crypto activities complicates supervision and enforcement, particularly when CASPs offer services across multiple jurisdictions with differing regulatory approaches.

To address these challenges, the BIS outlines policy approaches aimed at strengthening oversight while supporting responsible innovation. These include applying the principle of “same activity, same risk, same regulation” to ensure CASPs performing functions similar to traditional financial intermediaries are subject to comparable safeguards. The report also recommends enhancing international coordination among regulators to close supervisory gaps and prevent regulatory arbitrage, particularly as stablecoins and multifunction cryptoasset intermediaries continue to gain prominence in global markets.

The analysis draws on recent regulatory developments, including the European Union’s Markets in Crypto-Assets Regulation (MiCA), which became fully operational in December 2024 and now serves as a benchmark for comprehensive cryptoasset oversight. The BIS notes that MiCA’s licensing framework for CASPs, along with its requirements on governance, transparency, and consumer protection, reflects a growing trend toward aligning crypto regulation with established financial standards. Similar progress is observed in other jurisdictions, such as the United Kingdom’s phased implementation of cryptoasset regulations and ongoing efforts in Singapore and Japan to refine their virtual asset service provider (VASP) regimes.

Supporting this trend, the Financial Sector Conduct Authority (FSCA) in South Africa has intensified its oversight of cryptoasset service providers, advancing both licensing frameworks and enforcement actions. According to reports from Moneyweb and Insurance Biz published in early 2026, the FSCA has kicked off formal licensing of CASPs, requiring providers to meet stringent criteria related to financial soundness, operational resilience, and compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) obligations. This move positions South Africa among emerging markets taking proactive steps to integrate crypto activities into formal regulatory perimeters.

Further reinforcing the global shift toward structured oversight, TRM Labs’ Global Crypto Policy Review & Outlook 2025/26, released in December 2025, found that over 70% of jurisdictions reviewed had advanced new stablecoin regulatory frameworks in 2025. The report highlights that stablecoins, due to their potential to function as mediums of exchange on public blockchains, have become a focal point for policymakers seeking to balance innovation with financial integrity. Regulators in the United States, European Union, Hong Kong, Japan, Singapore, and the UAE have all introduced or refined rules governing stablecoin issuance, reserves, and redemption mechanisms.

The BIS report concludes that as cryptoasset markets mature and institutional participation grows, the need for consistent, risk-based regulation of CASPs becomes increasingly urgent. It warns that fragmented or delayed regulatory responses could undermine market stability and erode trust in digital asset ecosystems. Conversely, coordinated efforts to apply proportionate oversight — grounded in the activities performed rather than the technology used — can support safer innovation while preserving the benefits of blockchain-based financial services.

With global crypto exposure increasingly concentrated in jurisdictions that are strengthening their regulatory frameworks, the BIS analysis underscores the importance of treating CASPs as integral components of the evolving financial intermediation chain. Their proper supervision, the report argues, is not only essential for mitigating risks but also for fostering long-term resilience and credibility in digital asset markets.