The regulatory application shouldn’t include the following statement “We are in the process of launching a cryptocurrency platform”.
Can users convert cryptocurrency into fiat? Can the platform transfer virtual assets? Will the company control client wallets or private keys? Are they administering a digital asset lending platform, issuing tokens, or managing a trading system?
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 might provide a favorable environment for fintech businesses however, entering the virtual-asset market today requires more than simply registering your company and creating a website.
First, 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 to the National Bank of Georgia.
This includes transfer of virtual assets and exchange, the administration of trading platforms, as well as the administration or custody of cryptocurrency. The regulation’s information states that the custody concept stretches to the management of the client’s private keys or wallet.
That makes the technical design of a cryptocurrency pertinent to its legal status.
A business owner who would like to get cryptocurrency licenses in Georgia should thus map out the customer journey they intend to take before developing the application. What happens when a customer deposit funds? Who manages the account? The assets can be transferred or exchanged? Which party authorizes transactions?
The answers that are precise and clear will help you determine what the company will be doing.
Your Business Plan Must Describe an actual company
VASP applications require more than a beautiful pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections over at least three years. This should include revenue, expenses and growth projections. The plan must also reflect that there is a real intention to run in Georgia.
This is an issue which must be addressed in the earliest possible time.
A business plan designed for investors will answer questions like: How quickly will the company expand? A business plan that is regulated must be able to explain how the business will function responsibly.
Georgian applicants for a vasp licence shouldn’t treat the commercial model as though it were unrelated. Instead they should be able to connect them.
AML cannot be added to the end
PB Services describes the preparation as a series of steps that include anti-money laundering and counter-terrorism financing controls.
The supplied material specifically warns that just taking an AML policy from a different jurisdiction is not sufficient since Georgian regulations must be integrated into the company’s framework.
It is equally important to look at the operational systems. Business plans should prove that the system used by the firm can identify related or potentially suspicious transactions.
Compliance needs to be a consideration in product development. By building a platform and then determining the way AML can be implemented in the future, you risk causing unnecessary delays and even redesign.
Capital is dependent on the Services you select
The necessity of establishing an early business model is a result of the regulatory capital.
As per the criteria set out in the source material, transfers and exchanges, including kiosks must be at or near 150,000 GEL. Administration of trading platforms is required to be 350,000 GEL and other services require 250,000 GEL. If multiple services are provided the threshold that’s most applicable is the one that is.
It’s not the same as normal operating capital. Evidence that the required amount is actually financed must accompany the application, and the capital needs to be maintained throughout operations.
A founder planning to get crypto blockchain license in Georgia is advised to consider regulatory capital when planning financial plans not after the rest of the application has been made.
Registration isn’t enough to complete the Compliance Work
The calendar of compliance doesn’t end with approval. The requirements include continuing obligations related to risk management, cybersecurity and technology resilience. They also address the retention of records, independent reviews, customer complaints, and retention of records.
To obtain an audit-free opinion from an independent source on the framework for risk management the company must be registered within twelve months. In accordance with the regulations, businesses must accept complaints either in written or oral form and then review them within a month. Additionally, they must submit statistics on complaints to the National Bank electronically each month.
These factors affect the way an experienced applicant approaches licensing.
Imagine the Georgian VASP Application as the design of an unregulated business.
A company’s structure, service model and technology, AML controls as well the procedures for risk, capital requirements and customer-facing processes should be in sync.
Georgia continues to present opportunities for fintech and crypto companies, and its regulation framework gives businesses a clearly defined route into the market. The best place to begin is not by asking how fast a license can be granted.
It’s the ability, with specificity, detail what your crypto company intends to accomplish and be able to demonstrate that the business will be doing it within Georgia’s legal framework.