It’s not accurate enough to describe a legal application like “We’re the first to launch our crypto platform”.
Customers can exchange crypto for fiat currency? The platform will be able to move virtual assets? The company will be able to control clients’ wallets and private keys? Are they managing an online trading platform or lending against digital assets or intending to issue tokens?
Those differences matter when pursuing a crypto license in Georgia because the services a company intends to provide affect its regulatory preparation, documentation, controls, and capital requirements.
Georgia is a great place for fintech companies, but getting into its highly-regulated virtual asset market takes more than just registering a business and creating a website.
Definition of the scope of service
Businesses providing virtual-assets services for third-party clients are required to become Virtual Asset Service Providers to the National Bank of Georgia under the framework described by PB Services.
The scope covers activities like virtual asset exchange and transfer, platform administration for trading, and cryptocurrency custody or management. The information on regulation states that the custody concept extends to the management of the clients’ private keys or wallet.
The technical structure of the cryptocurrency product is crucial to its status with respect to regulation.
An entrepreneur who is interested in obtaining a crypto licence in Georgia should sketch out the customer’s journey prior to making the application. What happens when a client deposit funds? Who is the person who controls the account? Are assets able to be traded or transferred? Who is the person who is able to authorize a transaction?
Questions that are precise and clear help determine what the business will be doing.
Your business plan must detail an actual business
VASP applications also require more than just a gorgeous pitch deck.
Based on the information given by the National Bank requires a detailed plan of business with financial projections covering an minimum of three years. These include income, expense, as well as growth expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
This is a requirement that needs to be considered early.
A business plan that is written for investors will answer questions like: How quickly can the business grow? The business plan for regulatory compliance should include a description of how the business will run in a responsible manner.
Georgians who apply for a vasp license should not view the commercial model as if it were unrelated. Instead they should be able to connect them.
AML is not able to be added at the end
PB Services describes the preparation as a series of actions that cover anti-money laundering, as well as counter-terrorism controls.
The document warns that the importation of an AML Policy from a different jurisdiction won’t suffice since Georgian requirements must be incorporated into the company’s structure.
The operational systems are important in the same way. Business plans must show that the system of the business can detect similar and suspicious transactions from the outset.
Practically, the compliance of a product must influence its design before it’s launched. It is not advised to create a platform prior to deciding on how AML policies are to be implemented. This could lead to costly redesigns and delays.
Capital is dependent on the Services you select
The business model should be determined as early as possible is vital for a variety of reasons, including the requirement for capital.
According to the thresholds in the documents, kiosks and exchanges require 150 000 GEL. Management of trading platforms requires 350,000 GEL whereas other covered services require only 250,000 GEL. If several services are offered, the threshold that is most applicable is the one that is.
This is different from normal operating capital or capital investment. The application should be supported by evidence that the requested amount is financed.
An entrepreneur who plans to apply for a crypto blockchain license in Georgia should consider regulatory capital in the course of financial planning, not until the rest of the application is complete.
The registration process is not the end of the compliance process.
Approval isn’t the moment where the compliance calendar is removed. The guidelines provide ongoing obligations involving cybersecurity, risk management technology and risk of fraud, recording retention, independent review as well as customer complaints.
For instance an independent auditor’s report on the risk-management framework must be obtained within 12 months of registration. Companies must also adhere to the described rules to handle complaints. They must accept all complaints, whether they’re written, verbal or electronically, and review them within a one-month period, and also to submit figures on complaints submitted electronically to National Bank every month.
These details affect how an applicant who is serious should approach licensing.
Instead of thinking of the Georgian VASP application as a collection of forms needed to receive permission imagine it as the design of the business that is regulated.
It is vital that the structure of the company and technology, AML controls and regulatory capital, as well as the customer’s processes are in perfect harmony.
Georgia is continuing to provide opportunities for crypto and fintech businesses. Additionally, its regulatory framework provides a defined pathway to the market. However, the best starting point isn’t to ask how fast a license can be obtained.
It is essential to explain in detail how your crypto-business is planning to do, and demonstrate that you’re able to abide by Georgia’s laws.