“We’re going to launch a cryptocurrency platform” isn’t an accurate enough description of a regulatory application.
Customers can convert cryptocurrency to fiat? Does the platform permit virtual assets to be transferred? Do they have control over client wallets as well as private keys? Does it plan to administer a trading platform or lend against digital assets?
These differences are important when seeking cryptocurrency licenses in Georgia because the services a company is planning to provide affect its regulatory preparation documents, controls, and capital requirements.
Georgia is an ideal place for fintech firms, but getting into its highly-regulated virtual asset market is more than simply registering a company and establishing a website.
Defining 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 covers activities like virtual asset exchange and transfer, management of platforms for trading, and cryptocurrency custody or management. The information on regulation states that the custody concept stretches to the administration of clients’ private keys or wallet.
This means that the design of an crypto-product important to its regulation status.
A founder interested in obtaining the crypto license in Georgia should thus map out the proposed customer journey before creating the application. What happens when a customer deposits their assets? Who controls the wallet? Are assets able to be traded or transferred? Which party is authorized to authorise transactions?
Specific and precise help to determine what the company is doing.
Your Business Plan must Describe a Real Business
VASP applications require more than a beautiful pitch deck.
The National Bank will expect a comprehensive business plan that includes projections of financials for minimum three years. The plan should contain the growth, expense and revenue expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
That requirement deserves attention early.
Investors can inquire about how quickly the business will grow. A business plan for a regulatory operation must also include details about how it will be run in a responsible manner.
Companies that are seeking vasp Georgia license should be prepared to join the commercial model with the compliance model, rather than treating them as separate documents.
AML is not able to be added at the very end
PB Services describes the preparation as a sequence of steps that includes anti-money laundering as well as control of financing for terrorism.
The document specifically warns against simply importing a policy regarding AML from another jurisdiction because Georgian regulations need to be integrated into the framework of a business.
The operational systems play a role as well. The business plan needs to show that the system can identify possible suspicious transactions and the associated activities.
Compliance must be an aspect of product development. Building a platform first and asking what AML procedures fit later could lead to unnecessary changes and cause delays.
Capital is contingent on the Services You Select
The need to establish the business model in time is due to regulatory capital.
As per the thresholds set out in the document, exchange and transfer activities, including kiosks, require 150,000 GEL. Management of trading platforms requires 350,000 GEL however other covered services are only required to be 250,000 GEL. If there are multiple services offered the threshold that’s most applicable is the one that is.
It is not the same as normal operating capital. Evidence that the required amount was actually paid for is required with the application and the capital should be kept in place throughout the operation.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration doesn’t complete the task of ensuring compliance.
The calendar of compliance does not expire with the approval. The guidelines outline the ongoing obligations for risk management and cybersecurity, technology resilience fraud risk as well as record retention, independent review and complaints from customers.
For instance, an independent auditor’s opinion regarding the risk-management framework has to be obtained within 12 months from the time of registration. As per the regulations, businesses must accept complaints either written or verbally and review them within one month. They must also send statistics of complaints to the National Bank electronically each month.
These factors can affect the way that a serious license applicant approach licensing.
Consider the Georgian VASP as a visual design for a business rather than a set of forms that must be filled out.
The company structure, service model, technology, AML controls, capital regulations procedures for risk, the company’s structure, and customer processes need to connect.
Georgia is a great place to start crypto and fintech companies, and the legal framework offers an open path to entering the market. However, asking when you can apply for a license is not the most effective way to start.
It’s about being able to describe precisely what your company’s crypto operations will accomplish and showing that the company is prepared to do it within the Georgian regulatory framework.