It’s not enough precise to describe a legal application like “We’re launching our crypto platform”.
Can users exchange crypto to fiat currency? Will the platform transfer virtual assets? Do they have control over wallets for clients as well as private keys? Are they administering an online asset lending platform in the process of distributing tokens or managing a trading system?
Those differences matter when pursuing cryptocurrency licenses in Georgia due to the services that a business plans to offer determine its preparation for the regulatory process documents, controls, and capital requirements.
Georgia is a fantastic location for fintech firms, but to enter its regulated virtual asset market, you need more than registering a company and establishing a website.
First, define the Service.
In the framework outlined by PB Services, businesses providing covered services in the field of virtual assets for third parties must register as virtual asset service providers to the National Bank of Georgia.
The scope of the concept includes things like exchange of virtual assets and transfer, trading-platform administration and custody or management. Importantly, according to the regulation information the concept of custody includes management of a client’s personal keys and wallet.
The technical structure of the cryptocurrency product is pertinent to its place in relation to regulation.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when the customer deposit their money? Who controls the wallet? Can assets be traded or transferred? Who is the entity that is able to authorize a transaction?
Clear answers help establish the exact nature of what the business will be doing.
Your Business Plan must be able to describe a real-world business
A VASP application requires more than an attractive pitch deck.
Based on the information provided, the National Bank expects a detailed business plan with financial projections for at least three years, including revenues, expenses, as well as growth assumptions. The plan should also show an actual intention to be a part of Georgia.
This is a requirement that needs to be considered early.
A business plan designed for investors will answer questions such as how quickly the company will grow. The regulatory business plan should explain how the business will run in a responsible manner.
For companies that are looking for a license to use vasp Georgia applicants must be able to connect the commercial model to the compliance model rather than thinking of them as separate documents.
AML is not possible to add at the very end
PB Services describes the preparation as a sequence of steps that cover anti-money laundering, as well as anti-terrorism financing controls.
The document specifically warns against the importation of a policy regarding AML from another jurisdiction because Georgian AML regulations must be incorporated into the framework of a company.
The operational systems are important in the same way. The business plan should demonstrate that the company’s system can identify related and potentially suspicious transactions right from the beginning.
Compliance must be a factor in product development. The process of creating a platform before seeking out how AML procedures fit later can create unnecessary redesign and lead to delays.
The Services You Choose Can Impact Your Capital
The necessity of establishing 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. Trading platform administration needs 350,000 GEL in addition to other covered services require 250,000 GEL. The maximum threshold applies when multiple services are provided.
This is different from operating capital or capital invested. A proof that the requested amount is actually financed must accompany the request. Additionally, the capital needs to be maintained all through the operation.
The founder who wishes to obtain a crypto-blockchain license in Georgia should therefore take into consideration the regulatory capital in his budgeting process and not wait until the other aspects have been taken care of.
Registration doesn’t complete the task of ensuring compliance.
Approval isn’t the moment when the compliance calendar is removed. The supplied requirements describe the ongoing obligations in cybersecurity, risk management technology fraud risk, records retention, independent reviews and complaints from customers.
For instance an independent auditor’s report regarding the risk-management system must be sought within 12 months of the date of registration. The rules for handling complaints stipulate that businesses must accept complaints in written, oral or electronically and then analyze them within a maximum of one month, and submit complaint statistics electronically to the National Bank each month.
These factors can affect the way that a serious license applicant is approached when it comes to licensing.
Imagine that you are using a Georgian VASP Application as the look of a controlled business.
The company structure, service model technology, structure, AML controls, capital regulations processes for risk, as well as the customer’s processes must connect.
Georgia is a good place to start fintech and crypto businesses. The framework for regulation provides a well-defined path to the market. But the strongest starting point isn’t asking how quickly an approval can be obtained.
It’s being able to explain clearly what your cryptocurrency business plans to be doing and proving that the business is ready to carry out the work within the Georgian regulatory framework.