The regulatory application should not contain the words “We are launching a cryptocurrency platform”.
Customers can exchange cryptocurrency in exchange against fiat? Can the platform be used to move virtual assets? Will the company be in control of client wallets or keys? Is it managing the trading platform and lending against digital assets or is it planning to issue tokens?
These differences are important when applying for the crypto-license in Georgia as the type of products and services a business plans to provide will affect its legal requirements documents, controls, and capital requirements.
Georgia may offer an attractive setting for fintech companies however, gaining access to its controlled virtual-asset marketplace now requires more than just registering a business and launching a website.
Then, you must define the Service.
According to the guidelines set forth by PB Services, businesses providing covered virtual-asset service to third parties are required to register as Virtual Asset Service Providers to the National Bank of Georgia.
This includes transfer of virtual assets and exchange, administration of trading platforms, and management or custody of cryptocurrency. In addition, the provided regulations state that the concept of custody also applies to administration of a client’s private keys or wallet.
The design and technical aspects of the cryptocurrency product is important to its place in terms of regulation.
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 is the person who controls the account? Are assets able to be exchanged or transferred? Which person is authorized approve transactions?
Questions that are precise and clear help determine what the company will be doing.
Your Business Plan must describe the real business
VASP applications need more than just an appealing pitch deck.
Based on the information provided The National Bank expects a detailed business plan with financial projections that cover at least three years, including revenue, expenses, and growth forecasts. The plan must also reflect a genuine intention to operate in Georgia.
This requirement should be addressed early.
Investors can ask questions like how quickly the business will grow. A regulation-based business plan should be able to explain how the business will be conducted in a responsible manner.
Companies that are seeking a vasp Georgia license must be prepared to join to the commercial model as well as the compliance model, instead of treating the documents as separate documents.
AML cannot be added to the End
PB Services describes the preparation as a sequence of steps that include anti-money laundering and counter-terrorism controls.
The supplied material specifically warns that just importing an AML policy from a different jurisdiction is insufficient because Georgian rules must be integrated into the company’s structure.
It is equally important to take into account the operational system. The business plan should show that the system used by the company can detect suspicious transactions.
Practically speaking, the conformity of a product should influence its development before it is released. When you build a platform, and then determining how AML will work in the future, you risk causing delay and unnecessary changes.
Capital Depends on the Services You Select
The need for regulatory capital is a further reason to establish the business model earlier.
Under the thresholds provided in the source material Exchange and transfer activities such as kiosks, need 150,000 GEL. Trading platform administration is required to be 350,000 GEL in addition to other covered services need 250,000 GEL. When several services are provided, the highest applicable threshold determines.
This is different from operating capital or capital invested. The evidence that the amount has actually been funded must be included with the application and the capital needs to remain in operation throughout its duration.
The founder who plans to obtain a an authorization for crypto-blockchain in Georgia should consequently consider regulatory capital during financial planning not until the rest of the application has already been made.
Registration isn’t the end of compliance work
Approval isn’t the moment where the compliance calendar ceases to exist. The supplied requirements describe ongoing obligations involving cybersecurity, risk management technology and risk of fraud, recording retention, independent review and complaints from customers.
For example an independent auditor’s report regarding the risk-management system must be sought within 12 months from the time of registration. The rules state that businesses are required to accept complaints in writing or in oral form and review them within one month. They must also provide a report of complaints to the National Bank electronically each month.
These factors affect the way an experienced applicant approaches licensing.
Imagine an Georgian VASP Application to represent the layout of a unregulated business.
The corporate structure, the service model technology, AML controls, capital regulations processes, risk management, and the customer’s processes must connect.
Georgia is a good location for crypto and fintech businesses. Its regulatory framework provides an easily-defined route to the market. The best place to start isn’t about how fast a license can be obtained.
It’s explaining, in precise terms, the things your crypto company will do and demonstrating that your business is prepared to operate within Georgia’s regulatory framework.
