“We’re in the process of launching a crypto-based platform” isn’t an accurate enough description of a regulatory application.
Customers can convert cryptocurrency to fiat? The platform will allow the transfer of virtual assets? Will the company be in charge of client wallets or keys? Is it planning to run an exchange platform or lend against digital assets?
These differences matter when seeking the cryptocurrency license to operate in Georgia. The type of service a business intends to offer determines the preparation of its regulatory documents controls, and capital requirements.
Georgia has a legal market for virtual assets that is attractive to fintech firms. However, entering the market takes more effort than simply registering a company and launching your website.
Then, you must define the Service.
Businesses offering virtual assets to third party clients must be registered as Virtual Asset Service Providers to the National Bank of Georgia under the structure described by PB Services.
Within the scope are the activities of virtual asset exchange and transfer as well as management of trading platforms and the management of crypto assets or custody. In addition, the provided legal information states that the concept of custody also applies to administration of a client’s private wallet or key.
This is what makes the design of the crypto-product relevant to its regulatory status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens after a customer deposit funds? Who owns the wallet? Can assets be exchanged or transferred? Who is the party that has the authority to approve a transaction?
The answers that are precise and clear will help you determine what the company will be doing.
The business plan you create must outline the real-world business
VASP applications also require more than a stunning pitch deck.
The National Bank will expect a comprehensive business plan that includes financial projections over at least three years. The plan should contain revenue, expenses and growth assumptions. The plan must also demonstrate that there is a real intention to run in Georgia.
This need should be taken seriously and addressed as early as possible.
Investors are able to ask questions about how quickly the business will expand. A business plan that is regulated must provide a clear explanation of how the company will operate in a safe manner.
For businesses that are looking for a license to use vasp Georgia applicants must be able to link the commercial model with the compliance model rather than thinking of them as separate documents.
AML can’t be added at the end
The Anti-Money Laundering as well as the Counter-Terrorism Controls on financing are among the main components of the plan described by PB Services.
The information warns explicitly that importing an AML Policy from a different jurisdiction won’t suffice since Georgian rules must be incorporated into the framework of a company.
The operational systems are important. The business plan must prove that the company’s system can recognize potentially suspicious and related transactions.
Compliance must be a factor in product development. When you build a platform, and then determining how AML will function and how it will work, you could cause delay and unnecessary changes.
Capital is dependent on the Services you select
The need to establish the business model in time is due to capital required by the regulatory authorities.
According to the thresholds in the source materials, kiosks and exchange activities require 150 000 GEL. Administration of trading platforms requires 350,000 GEL and other services need 250,000 GEL. When several services are provided, the highest applicable threshold is the one to be used.
It’s not as simple as operating capital that is used for normal purposes. A proof that the requested amount is actually financed must accompany the request. Likewise, the capital has to be maintained all through the operation.
A business owner who intends to apply for a crypto blockchain license in Georgia must consider the regulatory capital at the time of financial planning, not until after the remainder of the application is completed.
Registration isn’t the only aspect of compliance work
The compliance calendar will not disappear with the date of approval. The requirements provided outline the ongoing obligations in cybersecurity, risk management, technological resilience fraud risk, records retention, independent review and complaints from customers.
For example an opinion of an independent auditor on the risk management framework should be sought within 12 months of the date of registration. The rules for handling complaints require companies to accept complaints in written, oral or electronic formats and analyze them within a maximum of one month, and submit data on complaints electronically to National Bank each month.
These factors affect the way an applicant who is serious should approach licensing.
Instead of thinking of the Georgian VASP application as a set of documents required to obtain permission consider it as the style of an authorized business.
It is essential that the structure of the company, technology, AML controls and regulatory capital, as well as customer processes, are in perfect alignment.
Georgia continues to present opportunities for crypto and fintech businesses. Additionally, its regulatory framework is a well-defined way to enter the market. The best way to begin is to inquire about how fast a license can be issued.
You should be able to explain in detail how your crypto-business will do and show that you’re able to comply with Georgia’s regulations.