Transfer of virtual assets
Third service in the list of VASP services (“Limb (iii)”). It covers any service provided by a person allowing its customers to transfer ownership, to transfer the control of a Virtual asset to another user, or to transfer Virtual assets between addresses/accounts held by the same customer. This also includes transfers performed by the VASP between and among customers of the same VASP, including where a VASP uses an off-chain internal record-keeping system and the Virtual asset remains in the same on-chain omnibus wallet or account (FATF Virtual asset Guidance, §64).
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However, if a person maintains unilateral control of their assets at all times, this may indicate that the service provider is not providing a qualifying service under Limb (iii), since it may not be providing services on behalf of or for its customer, as a business. It could nevertheless fall under Limb (iii) whenever it actively facilitates the transfer of Virtual assets (FATF Virtual asset Guidance, §64).
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Furthermore, transfer services may also be provided through technology that is commonly referred to as decentralized exchange platform/application. These platforms/applications run usually on a decentralized ledger technology (“DLT”) – e.g., a blockchain or similar technology – but where a central party has often some degree of involvement or control: to create and launch a Virtual asset, develop the functions of the decentralized exchange platform/application, develop the user interfaces, or collect fees. A decentralized exchange platform/application is not itself a VASP, as VASPs provisions only apply to ‘persons’ but not to the underlying software or technology. However, the persons who maintain, control or wield some level of influence over the arrangements taking place on the platform (i.e. creators, owners and operators of that platform/application) may fall under the VASP definition. This may be the case, even if the arrangements seem decentralized or if processes of the service are automated (FATF Virtual asset Guidance, §66 and 67).
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Examples of Limb (iii) VASPs:
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Providers that actively facilitate or allow users to send Virtual assets to other individuals, as in a personal remittance payment, payment for non-financial goods or services, or payment of wages. A provider offering such a service will likely be a VASP (FATF Virtual asset Guidance, §65);
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Providers of Virtual assets escrow services if Virtual assets buyers use those services to send, receive or transfer fiat currency in exchange for Virtual assets; and if the entity providing those services has custody over the funds. Such provider may qualify as a VASP even if the service involves smart contract technology (FATF Virtual asset Guidance, §70);
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Providers of brokerage services if the services facilitate the issuance and trading of Virtual assets on behalf of a natural or legal person’s users (FATF Virtual asset Guidance, §70);
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Providers of order-book exchange services, which actively bring together orders for buyers and sellers, typically by enabling users to find counterparties, discover prices, and trade, potentially through the use of a matching engine that matches the buy and sell orders from users. However, a platform which only allows buyers and sellers of Virtual assets to advertise their trading interest, buyers and sellers find each other, and that does not undertake any of the services in the definition of a VASP, would not be a VASP (FATF Virtual asset Guidance, §70);
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Providers of advanced trading services, which may allow users to access more sophisticated trading techniques, such as trading on margin or algorithm-based trading (FATF Virtual asset Guidance, §70);
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Providers of Virtual asset kiosks - often called “ATMs”, “bitcoin ATMs” or “vending machines” - that provide or actively facilitate covered Virtual asset activities via physical electronic terminals (the kiosks) that enable the owner/operator to facilitate the transfer of Virtual assets (FATF Virtual asset Guidance, §71).