The regulatory application shouldn’t include the statement “We are launching a cryptocurrency platform”.
Customers can convert cryptocurrency to fiat? The platform will be able to transfer virtual assets? The company will be able to control clients’ wallets and private keys? Will it manage the trading platform or lend against digital assets?
The distinctions are significant when it comes to obtaining the crypto license in Georgia because the services a company intends to provide will impact its preparation for regulatory compliance and documentation, controls and capital requirements.
Georgia provides a well-regulated market for virtual assets, which is attractive to fintech firms. However, entering this market takes more effort than simply registering your business and launching a website.
Definition of the nature of service
Businesses offering virtual asset services to third parties under the framework described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Within the scope are activities like virtual asset exchange and transfer as well as management of trading platforms and custody management for cryptocurrency. The regulations state that the custody concept extends to the administration of the client’s private keys, or wallet.
The technical structure of the crypto product is crucial to its status as a result of regulations.
Before submitting a license application the founder interested in obtaining an e-currency permit in Georgia should map out the customer journey. What happens after a customer deposits funds? Who manages the account? Can assets be exchanged or transferred? Which party authorizes transactions?
Questions that are precise and clear will help you determine what the business is doing.
Your Business Plan Should Describe the Real Business
VASP applications require more than a pretty pitch deck.
The National Bank will expect a thorough business plan with financial projections over minimum three years. This should include revenue, expenses and growth projections. The plan must also indicate the intention to operate within Georgia.
It is essential to deal with this issue as quickly as it is possible.
A business plan that is written for investors will address questions like: How quickly can the company grow? The business plan of the regulatory process must include information on how the business will be managed in a responsible manner.
For companies seeking a vasp license Georgia applicants should be prepared to connect the commercial model with the compliance model rather than treating them as unrelated documents.
AML Cannot Be Added at the end
PB Services has described the procedure of preparation as a significant part of which are the controls against money laundering and terrorist financing.
The supplied material specifically warns that just taking an AML policy from another state isn’t enough because Georgian rules must be incorporated into the company’s structure.
It is also essential to look at the operational systems. The business plan needs to show that the system can recognize possible suspicious transactions and the associated activities.
Compliance needs to be a consideration in product development. By creating a platform, then deciding on the way AML will function it can lead to delay and unnecessary changes.
Capital Depends on the Services You Select
The need to establish an early business plan is due to regulatory capital.
As per the guidelines in the source materials for exchange and transfer, including kiosks have to be at minimum 150,000 GEL. Trading platform administration requires 350,000 GEL while other covered services require 250,000 GEL. If several services are offered the threshold which is most applicable is the one that is.
It’s not as simple as the normal operating capital. The application should be accompanied by proof that the requested amount has been funded.
Anyone who wants to get a an authorization for crypto-blockchain in Georgia must therefore consider regulatory capital as part of financial planning not before the rest of the application has been made.
Registration Don’t End the Compliance Work
The compliance calendar doesn’t end when you have approval. It is a requirement that includes continuous obligations pertaining to cybersecurity, risk management and technological resilience. They also address the retention of records, independent review customer complaints, as well as records retention.
A framework for risk management, for example, will require an opinion by an independent auditor within the 12 months after registration. The rules on handling complaints oblige businesses to take complaints in oral, written or in electronic format and then review them within a maximum of one month, and provide details of complaints electronically to National Bank each month.
Those details change how an experienced applicant approaches licensing.
Imagine a Georgian VASP Application as the design of an controlled business.
A company’s structure, service model, and technological capabilities, AML controls as well the risk management procedures, regulatory capital and customer-facing processes should be in sync.
Georgia continues to provide opportunities for crypto and fintech companies, and its regulatory framework offers a clear pathway to the market. But asking about how quickly you can apply for an approval isn’t the best way to begin.
It’s about being able in a specific manner, to describe what your crypto business plans to do and to demonstrate that the company will be doing so within the legal framework of Georgia.
