“We’re going to launch a cryptocurrency platform” isn’t a clear enough description for a regulatory application.
Will customers exchange cryptocurrency against fiat? Will the platform be able to transfer virtual assets? The company will have control over wallets for clients and private keys? Is it administering an online trading platform, crediting against digital assets, or is it planning to issue tokens?
The differences in these two areas are crucial when you seek the crypto license in Georgia because the services a business plans to offer will impact its preparation for regulatory compliance, documentation, controls, as well as capital requirements.
Georgia offers a market that is regulated for virtual assets that is appealing to fintech companies. However, getting into this market is more difficult than just registering your business and launching a website.
Then, you must define the Service.
Based on the model described by PB Services, businesses providing covered virtual asset services to third parties must register as virtual asset service providers with the National Bank of Georgia.
The scope encompasses activities including virtual-asset exchange, transfer, management of platforms for trading and custody of cryptocurrency management. The regulation’s information states that the custody concept stretches to the administration of the client’s private keys or wallet.
This means that the design of an crypto-product important to its regulatory status.
An entrepreneur who is interested in getting the crypto license in Georgia should therefore map the proposed customer journey before developing the application. What happens when a customer deposits assets? Who is the person who controls the wallet? Can assets be exchanged or transferred? Who is the one who approves the transaction?
It is important to know what the business is actually going to be doing.
Your Business Plan Must describe a real business
VASP applications also require more than a stunning pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections for minimum three years. The plan should contain income, expenses and growth assumptions. The plan must also demonstrate the intention to be a part of Georgia.
This is a problem that must be addressed as soon as possible.
A business plan written for investors can answer questions like: How quickly can the company grow? The business plan of a regulatory operation must also contain information about 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 Does not qualify for inclusion in the end
PB Services describes the preparation as a set of steps which include anti-money laundering and anti-terrorism financing controls.
The document specifically states that just import of an AML policy from another jurisdiction isn’t enough because Georgian requirements need to be incorporated into the company’s framework.
The operational systems must be considered in the same way. The business plan needs to demonstrate that the company’s systems can spot related and suspicious transactions at the very beginning.
Practically, the quality of a product has to influence the development of the product before it can be released. Building a platform first and considering what AML procedures fit later can create unnecessary redesign and create delays.
Capital Depends on the Services You Select
Regulatory capital is another reason to determine the business model before.
Under the thresholds provided in the sources the transfer and exchange activities, including kiosks, require 150,000 GEL. Trading-platform management requires 350,000 GEL whereas other covered services need only 250,000 GEL. If multiple services are being offered, the highest applicable threshold determines.
This is distinct from normal operating or investment capital. A proof that the requested amount is actually financed must accompany the request, and the capital must be maintained all through the operation.
The founder that wants to obtain a crypto-blockchain permit in Georgia should consider the regulatory capital in his budgeting process, not after the rest has been completed.
Registration Doesn’t Finish the Compliance Work
Approval isn’t the time where the compliance calendar goes away. The guidelines outline the ongoing obligations for risk management and cybersecurity, technology resilience and fraud risk, as well as record retention, independent review and complaints from customers.
A risk-management framework, for example, must receive an opinion from an independent auditor within 12 month of registration. In accordance with the regulations, companies must take complaints written or verbally and review them within one month. Additionally, they must provide a report of complaints to the National Bank electronically each month.
These details affect how a serious applicant should approach licensing.
Instead of thinking of a Georgian VASP application as a set of documents required to obtain permission imagine it as the design of an authorized business.
It is essential that the corporate structure and technology, AML controls and regulatory capital, along with customer processes, are in harmony.
Georgia provides opportunities for firms in fintech and crypto, and the legal framework gives a clear path into the market. However, asking about the speed at which you can apply for an authorization isn’t necessarily the best approach to begin.
You should be able to describe in detail what your crypto-business’s goals are, and demonstrate that you’re ready to adhere to Georgia’s rules.