It’s not precise enough to describe a legal application like “We’re creating our own crypto platform”.
Customers can exchange cryptocurrency in exchange against fiat? The platform will be able to transfer virtual assets? The company will be able to control clients’ wallets and private keys? Is it managing an exchange platform or lending against digital assets, or thinking of releasing tokens?
Those differences matter when pursuing a crypto license in Georgia due to the services that a company is planning to provide will impact its preparation for regulatory compliance and documentation, controls and capital requirements.
Georgia offers a regulated market for virtual assets, which is attractive to fintech firms. However, entering this market is more work than simply registering your business and launching a website.
The definition of the nature of service
Companies that offer virtual asset services to third parties within the framework outlined in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Within the scope are actions like virtual asset exchange and transfer along with management of trading platforms and custody or management of cryptocurrency. It is important to note that the provided regulation states that the custody concept also extends to managing a client’s private keys or wallet.
This makes the design of an crypto-product important to its regulation status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when a user deposits assets? Who owns the account? The assets can be transferred or exchanged? Which party is authorized to authorize transactions?
The answers are clear and help determine what the business is actually going to be doing.
Your Business Plan Must provide a realistic description of your business
A VASP application needs more than an attractive pitch deck.
According to the information supplied in the report, the National Bank requires a detailed plan of business with financial projections spanning an minimum of three years. These include income, expense, as well as growth expectations. The plan must also indicate a genuine intention to operate in Georgia.
It is vital to address this issue as soon as it is possible.
A business plan written for investors can answer questions about how quickly the company can grow. A plan for business that is regulatory must include a description of how the operation will be conducted in a responsible manner.
Companies seeking vasp Georgia license must prepare to connect the commercial model with the compliance model, rather than treating them as distinct documents.
AML is not able to be added to the end
PB Services describes the preparation as a series of actions that includes anti-money laundering as well as control of financing for terrorism.
The provided material specifically warns against importing a law regarding AML from another jurisdiction because Georgian AML regulations must be incorporated into the framework of a company.
The operational systems are important as well. The business plan should be able to demonstrate that the business’s system can identify potentially suspicious and related transactions.
Practically speaking, the conformity of a product should influence its development prior to being released. By creating a platform, then deciding how AML can be implemented in the future, you risk causing unnecessary delays and even redesign.
Capital is Dependent on the services you select
Knowing the business model as early as is possible is crucial for a variety of reasons, such as regulatory capital.
Based on the requirements set in the document of origin the transfer and exchange activities such as kiosks, need 150,000 GEL. Management of a trading platform for trading requires 350,000 GEL and other covered services need 250,000 GEL. If there are multiple services offered the threshold which is the highest is used.
This is different from operating capital or capital investment. The application has to be accompanied by proof of the amount requested has been funded.
The founder who plans to obtain a an authorization for crypto-blockchain in Georgia should consequently consider regulatory capital during financial planning and not once the rest the application has already been put together.
Registration isn’t the only aspect of the compliance process.
The compliance calendar doesn’t end when you have approval. The requirements provided outline continuous obligations pertaining to cybersecurity, risk management, technological resilience fraud risk, records retention, independent reviews and complaints from customers.
A risk-management system is one example. It is required to receive an opinion from an independent auditor within a months of its registration. The guidelines for handling complaints stipulate that businesses must accept complaints in written, oral or electronic formats and to analyze them within a maximum of a month, and provide details of complaints electronically to National Bank each month.
These particulars affect the manner serious applicants must approach licensing.
Instead of thinking of a Georgian VASP application as a set of documents required to obtain permission to use it, think of it as the design of an regulated business.
It is essential that the corporate structure along with the technology, AML controls and regulatory capital, as well as the customer’s processes are in perfect harmony.
Georgia is a great place to start crypto and fintech companies, and the regulatory framework offers an open path to entering the market. But asking about how quickly you can obtain an authorization isn’t necessarily the most effective way to start.
You must be able explain in detail how your business’s crypto-related activities will be and prove that you’re prepared to adhere to Georgia’s rules.