Crypto Regulatory Glossary

AML

Anti-money laundering. The set of laws, regulations, and procedures designed to prevent the generation of income through illegal activity and its subsequent introduction into the financial system.

Legal ref: AMLD6 · FATF 40 Recommendations

AMLA

Anti-Money Laundering Authority. The EU-level supervisory body established to directly supervise high-risk financial entities, including CASPs, from 2026. Publishes binding supervisory standards and coordinates national competent authorities.

Legal ref: Regulation (EU) 2024/1620

AMLD

Anti-Money Laundering Directive. The EU legal framework for AML/CFT obligations, now in its sixth iteration (AMLD6). Sets minimum standards for customer due diligence, beneficial ownership, suspicious activity reporting, and obliged entity obligations.

Legal ref: AMLD6 (Directive (EU) 2018/1673)

ART

Asset-Referenced Token. A type of crypto-asset under MiCAR that purports to maintain a stable value by referencing multiple currencies, commodities, or other crypto-assets. Subject to stricter prudential requirements than other crypto-assets.

Legal ref: MiCAR Article 3(1)(6)

Address Clustering

A blockchain analytics technique that groups multiple wallet addresses believed to be controlled by the same entity, based on on-chain transaction patterns and heuristics such as common input ownership.

Address Poisoning

An attack vector where a malicious actor sends a small transaction to a victim's wallet from an address visually similar to a legitimate counterparty, attempting to cause the victim to copy the wrong address for future transactions.

Admitted to Trading

Under MiCAR, crypto-assets that have been accepted for trading on an authorised trading platform. Market abuse rules under MiCAR Title VI apply to crypto-assets admitted to trading.

Legal ref: MiCAR Article 82

Administrative Receiver

An insolvency officeholder appointed over a company's assets. In the context of CASPs, relevant for custody arrangements and the treatment of client crypto-assets in insolvency — MiCAR Article 70 requires segregation to protect clients in this scenario.

Appropriateness Test

Assessment required under MiCAR for CASPs providing certain services to clients who are not professional investors, to determine whether the client has the necessary experience and knowledge. Similar to MiFID II appropriateness requirements.

Legal ref: MiCAR Article 79

BSA

Bank Secrecy Act. The primary US federal AML law requiring financial institutions — including PPSIs under the GENIUS Act — to maintain records and file reports (SARs, CTRs) to assist in detecting and preventing money laundering.

Legal ref: 31 USC 5311 et seq.

Beneficial Owner

The natural person who ultimately owns or controls a legal entity, or on whose behalf a transaction is conducted. CASPs must identify beneficial owners of legal entity customers as part of CDD obligations.

Legal ref: AMLD5 Article 3(6) · MiCAR Article 83

Blockchain Analytics

Technology that analyses on-chain transaction data to attribute wallet addresses to entities, identify suspicious patterns, trace funds, and support AML monitoring. Essential for CASP compliance programmes.

Bridging Protocol

A DeFi mechanism that allows crypto-assets to be transferred between different blockchain networks. Used in typologies for layering because bridged assets can obscure the origin chain.

Buy Now Pay Later (BNPL) Crypto

Emerging payment model where consumers purchase crypto-assets on credit. Creates specific CDD and product suitability concerns under MiCAR conduct of business rules.

CASP

Crypto-Asset Service Provider. Any legal person or undertaking providing one or more crypto-asset services to clients on a professional basis under MiCAR. Requires authorisation from the home member state NCA.

Legal ref: MiCAR Article 3(1)(15)

CDD

Customer Due Diligence. The process by which a firm collects and verifies information about its customers, including identity, beneficial ownership, nature of business, and source of funds. Required under AMLD5/6 and MiCAR for CASPs.

Legal ref: AMLD5 · FATF R.10

CTR

Currency Transaction Report. A report required under BSA from US financial institutions for cash transactions exceeding $10,000. Under the GENIUS Act, PPSIs must file CTRs as part of their BSA compliance programme.

Crypto-Asset

Under MiCAR: a digital representation of value or rights that can be transferred and stored electronically using distributed ledger technology or similar technology. Does not include central bank digital currencies or financial instruments already covered by MiFID II.

Legal ref: MiCAR Article 3(1)(5)

Crypto-Asset Service

Under MiCAR, one of ten specified services including custody, operation of trading platforms, exchange of crypto-assets for funds or other crypto-assets, execution of orders, placing, reception and transmission, providing advice, and portfolio management.

Legal ref: MiCAR Article 3(1)(16)

Chain-Hopping

A layering technique where illicit funds are moved between multiple blockchain networks to obscure the transaction trail. Detected through multi-chain analytics and cross-chain attribution.

Chainalysis

A leading blockchain analytics provider used by CASPs, financial institutions, and law enforcement for transaction monitoring, sanctions screening, and forensic investigations. One of several tools in the crypto compliance ecosystem.

Chainanalysis of Funds

The process of tracing the origin and movement of crypto-asset funds through on-chain analysis. Critical for SAR preparation, sanctions screening, and counterparty due diligence.

Compliance Function

Under MiCAR Article 78, CASPs must establish an independent compliance function with direct board access. The function must monitor compliance, advise management, and report to the management body.

Legal ref: MiCAR Article 78

Conduct of Business

Rules governing how CASPs interact with clients — disclosure, best execution, suitability, conflicts of interest, and complaints handling. Covered under MiCAR Title V and modelled on MiFID II standards.

Legal ref: MiCAR Articles 66–82

Correspondent Banking

The provision of banking services by one bank to another. When banks provide services to CASPs as clients, AML obligations apply under both AMLD and MiCAR Article 83.

Crypto Exchange

A platform facilitating the buying, selling, or trading of crypto-assets. Under MiCAR, operating a trading platform is a regulated CASP service. Exchanges must be authorised and comply with market abuse, conduct, and AML obligations.

Custodian Wallet Provider

An entity that holds private keys on behalf of clients and provides crypto-asset custody services. Under MiCAR, providing custody is a regulated CASP service with specific segregation and reconciliation obligations.

Legal ref: MiCAR Article 70

DeFi

Decentralised Finance. Financial services built on blockchain protocols using smart contracts, without traditional intermediaries. Regulatory treatment under MiCAR depends on degree of decentralisation — "fully decentralised" services are excluded but few qualify.

Legal ref: MiCAR Recital 22

DORA

Digital Operational Resilience Act. EU Regulation 2022/2554 establishing requirements for ICT risk management, incident reporting, digital operational resilience testing, and third-party ICT risk for financial entities including CASPs.

Legal ref: Regulation (EU) 2022/2554

DPRK

Democratic People's Republic of Korea. North Korean state-sponsored actors have been attributed to over $1.4 billion in crypto-asset theft by the FATF (2026). A primary AML risk for CASPs, requiring specific wallet screening and transaction monitoring.

Dark Web Market

Online marketplace operating on anonymity networks (typically Tor) for illicit goods and services. Crypto-assets, particularly privacy coins, are commonly used for payment. On-chain forensics can often trace funds to and from dark web addresses.

De-risking

The practice by banks and financial institutions of terminating or restricting business relationships with entire categories of customers (such as CASPs) to avoid perceived regulatory risk. The FATF and EU regulators have cautioned against indiscriminate de-risking.

Delegated Regulation

A type of EU secondary legislation adopted by the European Commission based on powers delegated by a Regulation such as MiCAR. ESMA and EBA technical standards are typically implemented as delegated regulations.

Digital Asset

A broad term encompassing crypto-assets, tokenised securities, CBDCs, and other digital representations of value. Regulatory treatment varies — MiCAR covers most crypto-assets; securities tokens fall under MiFID II.

Distributed Ledger Technology (DLT)

Technology enabling the recording and sharing of data across multiple locations without centralised control. Blockchain is the most common form of DLT. MiCAR applies to crypto-assets using DLT or "similar technology."

Legal ref: MiCAR Article 3(1)(1)

Dual-Use

In crypto compliance context, refers to technologies or services that have both legitimate and illicit uses — such as privacy coins, mixers, or peer-to-peer exchanges. Compliance programmes must assess dual-use risk in customer and transaction risk rating.

EBA

European Banking Authority. EU regulatory authority with co-responsibility for MiCAR technical standards alongside ESMA. Leads on AML/CFT standards for CASPs and the Travel Rule RTS on unhosted wallet proof of ownership.

Legal ref: EBA Founding Regulation (EU) 1093/2010

ECB

European Central Bank. Responsible for monetary policy in the eurozone. Relevant to MiCAR through its oversight of EMT issuers that are significant and through its role in the EU digital euro project.

EMT

E-Money Token. A crypto-asset under MiCAR that purports to maintain a stable value by referencing the value of one official currency. Issuers must hold MiCAR authorisation; the PSD2 notification procedure ended March 2, 2026.

Legal ref: MiCAR Article 3(1)(7)

ESMA

European Securities and Markets Authority. The EU capital markets regulator co-responsible for MiCAR technical standards alongside EBA. Publishes regulatory and implementing technical standards, guidelines, and supervisory convergence guidance for NCAs.

Legal ref: ESMA Regulation (EU) 1095/2010

Enhanced Due Diligence (EDD)

A higher level of customer due diligence required for high-risk customers, including PEPs, customers in high-risk jurisdictions, and transactions with elevated risk indicators. Required under AMLD5/6 and MiCAR AML obligations.

Legal ref: AMLD5 Articles 18–24

Exchange Token

A crypto-asset that does not qualify as an ART, EMT, or financial instrument. Subject to the general MiCAR Title II requirements for public offerings and white paper publication. Examples include utility tokens and exchange tokens without a stable value reference.

Exit Scam

A fraud typology where a crypto project team abruptly ceases operations and absconds with investor funds. Relevant to SAR indicator identification and on-chain monitoring for sudden wallet emptying patterns.

FATF

Financial Action Task Force. The intergovernmental standard-setter for AML/CFT. Its 40 Recommendations form the basis of AML regimes worldwide. The 2019 VASP Guidance and 2021 update extended FATF standards explicitly to crypto-asset businesses.

Legal ref: FATF 40 Recommendations

FATF Grey List

Jurisdictions under increased monitoring by the FATF due to strategic deficiencies in their AML/CFT frameworks. CASPs must apply enhanced due diligence to customers and counterparties from grey-listed jurisdictions.

Legal ref: FATF Recommendation 19

FATF Blacklist

Formally "High-Risk Jurisdictions subject to a Call for Action." CASPs must apply countermeasures and enhanced due diligence to transactions involving blacklisted jurisdictions. The FATF currently identifies Iran and North Korea.

Legal ref: FATF Recommendation 19

FCA

Financial Conduct Authority. The UK financial regulator. Currently administers MLRS 2017 crypto registration; from 2027 will administer full FSMA 2000 crypto-asset authorisation framework.

FDIC

Federal Deposit Insurance Corporation. US banking regulator that proposed the supervisory framework for PPSI reserve management and AML compliance under the GENIUS Act in April 2026.

Legal ref: FDIC Proposed Rule (April 2026)

FFIEC

Federal Financial Institutions Examination Council. US body that publishes the BSA/AML Examination Manual used by federal bank examiners. The FDIC PPSI supervisory framework is modelled on FFIEC standards.

FIU

Financial Intelligence Unit. A national centre for the receipt, analysis, and dissemination of suspicious activity reports. CASPs must file SARs/STRs with the relevant national FIU. AMLA coordinates EU FIU cooperation from 2026.

FSMA

Financial Services and Markets Act 2000. The primary UK financial regulation statute, amended by the Financial Services and Markets Act 2023 to create the framework for the UK crypto-asset regulatory regime coming into full effect in 2027.

FinCEN

Financial Crimes Enforcement Network. A US Treasury bureau responsible for administering the BSA. PPSIs under the GENIUS Act must register with FinCEN and file SARs, CTRs, and comply with CIP requirements.

Legal ref: 31 CFR Chapter X

Fork

A change to a blockchain protocol that creates a divergence in the transaction history. Hard forks create new crypto-assets; soft forks are backward-compatible upgrades. CASPs must have policies for handling fork-created assets in custody accounts.

Fractional Reserve

A banking model where institutions hold only a fraction of deposits as reserves. Prohibited for PPSIs under the GENIUS Act and for ARTs/EMTs under MiCAR — both require full 1:1 or near-full reserve backing.

Front-Running

Trading ahead of a known pending order to profit from the anticipated price movement. Under MiCAR market abuse rules, front-running on the basis of inside information constitutes insider dealing.

Fungibility

The property of an asset whereby each unit is interchangeable with any other unit of the same type. Privacy-enhancing techniques like mixing aim to restore fungibility to inherently traceable crypto-assets.

GENIUS Act

Guiding and Establishing National Innovation for US Stablecoins Act. US federal legislation enacted in 2025 creating the Permitted Payment Stablecoin Issuer (PPSI) category, establishing reserve, AML, and governance requirements for USD-denominated stablecoin issuers.

Legal ref: GENIUS Act 2025

Governance Token

A crypto-asset that grants voting rights over a DeFi protocol or DAO. Regulators assess whether governance token holders constitute "owners or operators" of a VASP under FATF Guidance, potentially triggering AML obligations.

Grayscale

A US digital asset investment manager operating crypto ETFs and trusts. Not directly relevant as a regulatory term but referenced in discussions about institutional crypto-asset exposure and SEC regulatory actions.

Hard Wallet

A hardware device that stores cryptographic private keys offline. Transfers to/from hardware wallets constitute unhosted wallet transactions under MiCAR and the Travel Rule, triggering proof-of-ownership obligations.

Hash Rate

A measure of computational power in proof-of-work mining. Not directly regulated under MiCAR but relevant to environmental disclosure requirements for crypto-asset issuers under MiCAR Article 9.

Home Member State

Under MiCAR, the EU member state where a CASP's registered office is located or where it has its head office if registered in a non-EU country. Determines which NCA is the primary supervisor and the basis for passporting to other member states.

Legal ref: MiCAR Article 59(1)

ICT Risk

Information and communications technology risk. Under DORA, CASPs must maintain an ICT risk management framework, report major incidents, test operational resilience, and manage third-party ICT providers.

Legal ref: DORA (EU) 2022/2554

Inside Information

Under MiCAR, precise information related to one or more issuers of crypto-assets that has not been made public and would likely have a significant effect on the price of the crypto-asset if it were made public.

Legal ref: MiCAR Article 87

Insider Dealing

Under MiCAR, using inside information to acquire, dispose of, or cancel orders for crypto-assets admitted to trading on a trading platform. Constitutes market manipulation under MiCAR Title VI.

Legal ref: MiCAR Article 89

Institutional DeFi

The emerging market segment where regulated financial institutions engage with DeFi protocols under permissioned or hybrid models. Creates novel compliance challenges around CASP service classification and AML obligations.

Joint Money Laundering Steering Group (JMLSG)

A UK industry body that publishes guidance on how to comply with AML obligations. Particularly relevant for UK-regulated CASPs managing the transition from MLRS 2017 to FSMA 2027.

KYB

Know Your Business. The process of verifying the identity and assessing the risk of legal entity customers. Includes identifying beneficial owners, understanding the nature of the business, and verifying the source of funds.

KYC

Know Your Customer. The process of verifying the identity of individual clients and assessing their risk. Required under AMLD5/6, MiCAR Article 83, and the GENIUS Act CIP requirements for PPSIs.

Legal ref: AMLD5 · MiCAR Article 83

KYT

Know Your Transaction. Ongoing monitoring of transactions to identify unusual or suspicious patterns. Blockchain analytics tools enable KYT by attributing on-chain transaction flows to known entities and risk categories.

Layering

The second stage of money laundering, involving a series of complex transactions designed to obscure the origin of illicit funds. In crypto, techniques include mixing, chain-hopping, DeFi swaps, and peer-to-peer exchanges.

LEI

Legal Entity Identifier. A 20-character code identifying legal entities in financial transactions. MiCAR requires LEIs for CASPs in regulatory filings and the ESMA CASP register. The GENIUS Act references LEIs for PPSI identification.

Liquidity Risk

The risk that a CASP cannot meet its payment obligations as they fall due. Under MiCAR, ARTs and EMTs must meet specific liquidity standards. Under the GENIUS Act, PPSIs must maintain a 30-day net outflow coverage ratio.

MiCAR

Markets in Crypto-Assets Regulation. EU Regulation 2023/1114 establishing a comprehensive regulatory framework for crypto-asset markets, issuers, and service providers. In full force from December 2024.

Legal ref: Regulation (EU) 2023/1114

MiFID II

Markets in Financial Instruments Directive II. The EU securities regulation framework for investment services. Crypto-assets that qualify as financial instruments fall under MiFID II rather than MiCAR. The interaction between MiFID II and MiCAR must be assessed for each asset.

MLRO

Money Laundering Reporting Officer. The designated individual at a firm responsible for AML compliance, receiving internal suspicious activity reports, making SAR filing decisions, and liaising with the FIU. A required role under AMLD for CASPs.

MLRS

Money Laundering Regulations 2017. The UK AML registration regime currently applicable to crypto-asset businesses. Will be replaced by full FSMA 2000 authorisation in 2027. MLRS registration does not automatically convert to FSMA authorisation.

Management Body

The board of directors or equivalent governing body of a CASP. Under MiCAR Articles 68–72, management body members must have sufficient collective knowledge, skill, and experience; maintain adequate time commitment; and not have criminal convictions.

Legal ref: MiCAR Article 68

Market Capitalisation

Total market value of a crypto-asset's circulating supply. Used as a threshold for "significant" ART and EMT classification under MiCAR, triggering enhanced prudential requirements.

Market Manipulation

Under MiCAR: transactions or orders that give false or misleading signals about supply, demand, or price of a crypto-asset, or that fix prices at abnormal or artificial levels. Prohibited under MiCAR Title VI.

Legal ref: MiCAR Article 91

Material Change

Under MiCAR, a significant change to a CASP's authorised activities, legal structure, or risk profile that must be notified to the NCA before implementation. Failure to notify is a compliance breach.

Legal ref: MiCAR Article 62

Mixer

A service or protocol that combines crypto-asset transactions from multiple users to obscure the link between source and destination addresses. Used extensively in money laundering typologies. Several mixers have been sanctioned by OFAC.

Model Risk

The risk of adverse outcomes from errors in AI/machine learning models used in AML monitoring or risk scoring. AMLA's AML governance RTS requires CASPs to maintain documented model governance, validation, and explainability standards for AI tools.

Mutual Evaluation

The FATF's peer review process assessing whether a jurisdiction effectively implements FATF standards. Mutual evaluation ratings are public and used by CASPs in counterparty risk assessment and jurisdiction risk classification.

NCA

National Competent Authority. The regulatory body designated to supervise CASPs in each EU member state under MiCAR. Examples: BaFin (Germany), AMF (France), MFSA (Malta), CBI (Ireland).

NFT

Non-Fungible Token. A crypto-asset representing a unique digital item. MiCAR Recital 6 indicates that NFTs are generally outside scope, but ESMA has noted that NFTs with investment characteristics may qualify as financial instruments.

Non-Custodial Wallet

A wallet where the user holds their own private keys and the CASP does not take custody. Transactions involving non-custodial ("unhosted") wallets are subject to Travel Rule obligations for CASPs under MiCAR and the TFR.

OCC

Office of the Comptroller of the Currency. US banking regulator that will supervise federally chartered Permitted Payment Stablecoin Issuers (PPSIs) under the GENIUS Act. OCC PPSI charter framework was expected Q3 2026.

OFAC

Office of Foreign Assets Control. US Treasury bureau administering economic and trade sanctions. CASPs must screen customer and wallet addresses against OFAC's SDN list. OFAC has sanctioned multiple crypto mixer addresses and exchange accounts.

On-chain

Referring to transactions or data recorded directly on a blockchain ledger. On-chain analytics is the primary tool for blockchain forensics and transaction monitoring in crypto compliance.

Order Execution

Under MiCAR, a regulated CASP service involving executing orders to buy or sell crypto-assets for the account of clients. Subject to best execution obligations under MiCAR Article 78.

Legal ref: MiCAR Article 3(1)(26)

PEP

Politically Exposed Person. An individual who holds a prominent public function. CASPs must apply enhanced due diligence to PEPs and their close associates and family members, as required under AMLD5/6 and MiCAR AML obligations.

Legal ref: AMLD5 Articles 20–23

PPSI

Permitted Payment Stablecoin Issuer. The regulatory category created by the GENIUS Act for entities authorised to issue payment stablecoins in the United States. Subject to 1:1 reserve, BSA/AML, governance, and technical compliance requirements.

Legal ref: GENIUS Act 2025

Passporting

Under MiCAR, a CASP authorised in one EU member state can provide its authorised services in any other member state without requiring separate national authorisations. Must notify the home NCA of intended cross-border services.

Legal ref: MiCAR Articles 60–61

Payment Token

A crypto-asset designed to function as a medium of exchange. Not a separate MiCAR category; treated as an "other crypto-asset" under MiCAR Title II unless it qualifies as an ART or EMT.

Peer-to-Peer (P2P)

Transactions directly between two parties without a centralised intermediary. P2P exchanges and OTC desks present specific AML risk because they may lack the CDD infrastructure of centralised exchanges.

Portfolio Management

Under MiCAR, a regulated CASP service involving managing portfolios of crypto-assets in accordance with client mandates. Subject to suitability assessment and conduct of business requirements.

Legal ref: MiCAR Article 3(1)(27)

Privacy Coin

A crypto-asset with enhanced privacy features that obscure transaction details, such as Monero (XMR) or Zcash (ZEC). Some EU member states require CASPs to delist privacy coins due to AML concerns. Relevant for counterparty and customer risk assessment.

Private Key

A cryptographic key that controls access to and the ability to sign transactions from a crypto-asset address. Custody of private keys is the legal and technical basis for MiCAR's custody service obligations.

Proof of Reserves

Documentation verifying that a CASP holds the claimed amount of crypto-assets on behalf of clients. Required under MiCAR Article 70 for custody CASPs; referenced in GENIUS Act reserve attestation requirements.

Legal ref: MiCAR Article 70

Protocol

In blockchain context, a set of rules governing a blockchain network or application layer. The regulatory treatment of protocol operators under MiCAR and FATF guidance is actively debated — governance token holders may constitute "operators" triggering AML obligations.

Prudential Requirements

Capital, liquidity, and risk management standards required of regulated entities. Under MiCAR, CASPs must hold own funds of at least €50,000–€150,000 depending on the services provided. ARTs and EMTs face additional prudential standards.

Legal ref: MiCAR Article 67

Ransomware

Malware that encrypts victim data and demands crypto-asset payment for decryption keys. Crypto-asset payments to sanctioned ransomware groups violate OFAC and EU sanctions. CASPs must identify and report ransomware-related transactions.

Regulatory Capital

The minimum capital a CASP must hold under MiCAR to absorb unexpected losses. The amount depends on the services authorised and is subject to ongoing monitoring and NCA reporting.

Legal ref: MiCAR Article 67

Regulatory Technical Standard (RTS)

Binding technical rules under EU law adopted as Commission Delegated Regulations. ESMA and EBA develop RTS under MiCAR on topics including whitepaper content, crypto-asset service requirements, and AML governance.

Remuneration Policy

Under MiCAR Article 70, CASPs must implement remuneration policies aligned with sound risk management, specifically prohibiting incentive structures that encourage excessive risk-taking.

Legal ref: MiCAR Article 70(1)(c)

Risk-Based Approach

The FATF's methodology for AML/CFT compliance, requiring entities to identify, assess, and understand ML/TF risks and apply proportionate measures. The EU's implementation through AMLD and MiCAR requires CASPs to calibrate their compliance programmes to their specific risk profile.

SAR

Suspicious Activity Report. A report filed by a financial institution, including CASPs, with the relevant FIU when suspicious activity is detected. Threshold: $5,000 (US/GENIUS Act); varies by EU member state. Filing is mandatory and must not be disclosed to the subject.

Legal ref: AMLD6 · FinCEN BSA

SDN List

Specially Designated Nationals and Blocked Persons List. Published by OFAC, it lists individuals and entities whose assets are blocked and with whom US persons are prohibited from transacting. CASPs must screen customer and wallet addresses against the SDN list.

SFTR

Securities Financing Transactions Regulation. EU Regulation 2015/2365. Potentially relevant to CASPs providing crypto-asset lending or repo-like services where the underlying assets are financial instruments.

SSRF

Source of Funds and Source of Wealth (SOFOW). AML documentation establishing the origin of the funds used in a transaction and the overall wealth of a customer. Required for high-risk customers and large transactions under AMLD EDD obligations.

STR

Suspicious Transaction Report. The European equivalent of a SAR — a report filed with the national FIU when suspicious activity is identified. Terminology varies by jurisdiction; some use SAR, others STR or STOR (suspicious transaction or order report).

Sanctions

Restrictive measures imposed by governments or international bodies on individuals, entities, or jurisdictions for political or security reasons. CASPs must screen against OFAC, EU, UK, and UN sanctions lists and apply countermeasures to sanctioned jurisdictions.

Segregation

Under MiCAR Article 70, CASPs providing custody must keep client crypto-assets separate from their own assets and from those of other clients. Regulatory response to the FTX collapse where client and firm assets were commingled.

Legal ref: MiCAR Article 70(1)

Self-Custody

Holding crypto-assets in a wallet where the user controls the private keys without custodial involvement of a third party. Transactions involving self-custody addresses are "unhosted wallet" transactions under TFR and GENIUS Act frameworks.

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces agreement terms. DeFi protocols are built on smart contracts. Under the GENIUS Act, PPSIs must implement freeze/seize capabilities that include smart contract-level controls.

Stablecoin

A crypto-asset designed to maintain a stable value, typically by referencing a fiat currency or basket of assets. Regulated as ARTs or EMTs under MiCAR and as PPSIs under the GENIUS Act.

Staking

The process of locking crypto-assets to support a proof-of-stake blockchain network in exchange for rewards. Whether custodial staking constitutes a regulated CASP service under MiCAR is under regulatory development. The FCA has indicated custodial staking is likely regulated under FSMA 2027.

Sunset Clause

A provision in legislation causing automatic expiry on a specified date unless renewed. Relevant to MiCAR transitional arrangements (Article 143) which expired in mid-2026, and to GENIUS Act minimum standards provisions.

Supervisory College

A group of supervisors from different jurisdictions coordinating oversight of a cross-border entity. Under AMLA, supervisory colleges are established for directly supervised CASPs operating across multiple EU member states.

Suitability Assessment

Under MiCAR, CASPs providing portfolio management or advice services must assess whether the service is suitable for the client based on their knowledge, experience, financial situation, and investment objectives.

Legal ref: MiCAR Article 81

TFR

Transfer of Funds Regulation. EU Regulation 2023/1113, commonly called the EU Travel Rule, requiring CASPs to collect and transmit originator and beneficiary information on crypto-asset transfers. In force from December 2024.

Legal ref: Regulation (EU) 2023/1113

Travel Rule

The FATF Recommendation 16 requirement that VASPs/CASPs collect and transmit identifying information about the originator and beneficiary of virtual asset transfers above threshold amounts. Implemented in the EU via TFR.

Legal ref: FATF R.16 · TFR (EU) 2023/1113

Third-Country Equivalence

Under MiCAR, a mechanism by which CASPs from non-EU jurisdictions may provide services to EU clients where the European Commission has determined that the third country's regulatory framework is equivalent to MiCAR.

Legal ref: MiCAR Article 60

Threshold Transaction

A transaction meeting or exceeding a specified value threshold triggering regulatory reporting or enhanced scrutiny obligations. Relevant thresholds include €1,000 (EU TFR unhosted wallet), $5,000 (US SAR), $10,000 (US CTR).

Token Issuance

The creation and public offering of crypto-assets. Under MiCAR, issuers of crypto-assets other than ARTs and EMTs must publish a white paper. ART and EMT issuers must obtain specific authorisation.

Legal ref: MiCAR Articles 4–17

Trading Platform

Under MiCAR, a multilateral system bringing together multiple buying and selling interests for crypto-assets. Operating a trading platform is a regulated CASP service requiring authorisation.

Legal ref: MiCAR Article 3(1)(23)

Transaction Monitoring

The ongoing process of reviewing customer transactions to detect patterns that may indicate money laundering, terrorist financing, or sanctions violations. CASPs must implement transaction monitoring systems calibrated to their specific risk profile.

TRISA

Travel Rule Information Sharing Alliance. An open-source protocol for inter-VASP Travel Rule compliance messaging. One of three main protocols (alongside OpenVASP and Sygna Bridge) used by EU CASPs for TFR compliance.

Unhosted Wallet

A crypto-asset wallet where the private keys are not held by a regulated service provider — typically a self-custody wallet or hardware wallet. Transfers to/from unhosted wallets above €1,000 require additional CDD under the EU TFR.

Utility Token

A crypto-asset providing access to a service or product. Under MiCAR, utility tokens may qualify as "other crypto-assets" subject to Title II requirements if they are not ARTs, EMTs, or financial instruments.

VARA

Virtual Assets Regulatory Authority. Dubai's dedicated crypto-asset regulator, established in 2022. Administers the licensing and supervision of Virtual Asset Service Providers in Dubai, including entities in the DIFC and DMCC free zones.

VASP

Virtual Asset Service Provider. The FATF terminology for entities providing services for virtual assets, broadly equivalent to the EU term CASP under MiCAR. The FATF's 2019 and 2021 guidance extended its Recommendations to VASPs.

Legal ref: FATF Guidance on VASPs (2019)

Volatility Risk

The risk that the market value of a crypto-asset changes significantly. CASPs holding crypto-assets as own funds must account for volatility risk in their capital adequacy assessments.

White Paper

Under MiCAR, a mandatory disclosure document that issuers of crypto-assets (other than ARTs and EMTs) must publish and notify to NCAs before offering tokens to the public or seeking admission to trading. Contains specific information requirements.

Legal ref: MiCAR Article 9

Whitelisting

A compliance control allowing transfers only to pre-approved wallet addresses. Used in institutional custody arrangements and as a risk control measure for high-risk customers. Relevant to Travel Rule obligations — whitelisted addresses may require reduced proof-of-ownership procedures.

Wallet Address

A unique identifier on a blockchain to which crypto-assets can be sent. Under MiCAR and the TFR, the wallet address serves as the account identifier in the travel rule information bundle.

Wrapped Token

A token pegged to another crypto-asset's value, used to enable assets from one blockchain to be used on another. Relevant to multi-chain compliance because wrapped tokens create cross-chain attribution challenges.

Zero-Knowledge Proof

A cryptographic method allowing one party to prove knowledge of information without revealing the information itself. Used in some privacy-preserving blockchain applications. Creates regulatory challenges for AML monitoring where transaction data is cryptographically obscured.