“We’re going to launch a cryptocurrency platform” isn’t an accurate enough description of a regulation application.
Can customers convert cryptocurrency to fiat? The platform will be able to move virtual assets? Can the company manage client wallets or private keys? Does it manage the trading platform and lending against digital assets or planning to issue tokens?
These distinctions are crucial when applying for the crypto-license in Georgia since the services a company plans to offer will affect its regulatory requirements, documentation, control, and capital requirements.
Georgia might provide a favorable setting for fintech companies, but entering its regulated virtual-asset market today requires more than simply registering your company and creating a website.
Then, you must define the Service.
Under the framework described by PB Services, businesses providing covered services in the field of virtual assets for third-party clients must be registered as Virtual Asset Service Providers with National Bank of Georgia.
The scope encompasses activities such as virtual-asset exchange and transfer, platform administration for trading as well as cryptocurrency custody management. As per the regulations provided the concept of custody includes administration of a customer’s private keys and wallet.
This makes the design of a crypto-product relevant to its regulatory position.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens after the client makes a deposit of their funds? Who is in charge of your wallet? Can assets be transferred or exchanged? Who is the party that is able to authorize a transaction?
Questions that are precise and clear help determine what the business will be doing.
Your business plan must describe an actual business
VASP applications need more than an attractive pitch deck.
The National Bank will expect a thorough business plan with financial projections that last minimum three years. This should include revenues, expenses and growth assumptions. The plan must also indicate the intention to be a part of Georgia.
It is important to address this issue as soon as possible.
A business plan designed for investors will answer concerns like how quickly the company’s growth rate can be accelerated. The business plan that is regulated must also describe how the operation is to be run responsibly.
Companies seeking a vasp license Georgia applicants should be prepared to connect the commercial model to the compliance model, rather than using them as separate documents.
AML cannot be added at the end
PB Services has described the preparation process as an important part of which are the controls against terrorist financing and money laundering.
The document warns that the import of an AML Policy from another jurisdiction will not suffice because Georgian rules must be incorporated into a business’s framework.
The operational systems must be considered also. The business plan should demonstrate that the system used by the company is able to detect any suspicious transactions or those that may be related to them.
Practically, the quality of a platform must affect the development of the product before it can be released. It isn’t a good idea to create a platform prior to deciding how AML policies are to be implemented. This can lead to delay and unnecessary changes.
The Services You Select Can Change Your Capital
The necessity of establishing an early business plan is due to regulatory capital.
Under the thresholds provided in the document Transfer and exchange operations, including kiosks, require 150,000 GEL. Management of a trading platform for trading needs 350,000 GEL while other covered services need 250,000 GEL. The most stringent thresholds apply when a variety of services are offered.
This is distinct from normal capital for investment or operating. Evidence that the required amount was actually funded is required with the application and the capital should remain in operation throughout its duration.
The person who is aspiring to apply for a crypto-blockchain licence in Georgia must therefore consider the capital required by Georgia’s regulatory authorities when calculating his financial plan, not after the rest is completed.
Registration doesn’t finish the compliance work
The calendar of compliance does not end with approval. The guidelines outline the ongoing obligations for cybersecurity and risk management as well as technology resilience and risk of fraud as well as record retention, independent review and customer complaints.
A framework for risk management is one example. It is required to receive an opinion from an independent auditor within 12 months after registration. The rules state that businesses are required to accept complaints in writing or in oral form and must review them within one month. Additionally, they must provide a report of complaints to the National Bank electronically each month.
These particulars can alter the way a serious license applicant approaches licensing.
Consider the Georgian VASP as a visual design for a business, rather than a set of forms that must be filled out.
The structure of the company, its service model technology, structure, AML controls, regulatory capital, risk procedures, and customer processes need to make sense together.
Georgia has opportunities for crypto and fintech companies, and the legal framework provides an open path to entering the market. But asking about how quickly you can receive an approval isn’t the most effective way to start.
You must be able explain in detail how your crypto-business’s goals are and show that you are prepared to adhere to Georgia’s rules.