It’s not clear enough to define a regulatory application as “We’re opening our cryptocurrency platform”.
Can customers exchange crypto for fiat currency? The platform will allow virtual assets to be transferred? Is the company in control of client wallets or keys? Is it administering the trading platform, lending against digital assets or thinking of releasing tokens?
These differences are essential when applying for a crypto-license within Georgia as the type of services a company is planning to offer will affect its legal requirements documents, controls, and capital requirements.
Georgia has a legal market for virtual assets, which is appealing to fintech companies. However, getting into this market is more work than simply registering a company and launching your website.
First, let’s define the service.
Companies that provide virtual assets services to third parties are required to become Virtual Asset Service Providers at the National Bank of Georgia under the framework described by PB Services.
The scope includes activities like virtual asset exchange and transfer, management of platforms for trading, and cryptocurrency custody or management. In addition, the provided regulations state that the custody concept extends to managing a client’s private key or wallet.
This makes the design of a product in the crypto space pertinent to its legal status.
An entrepreneur who is interested in getting a crypto license in Georgia should thus map out the desired customer journey prior to creating the application. What happens when a user deposits money? Who controls the wallet? Are assets able to be traded or transferred? Who is authorized to authorise transactions?
Clear answers help establish what the company will actually be doing.
Your Business Plan must describe the real business
VASP applications require more than a visually attractive pitch deck.
Based on the information given, the National Bank requires a detailed plan of operation that includes financial projections covering an minimum of three years. This includes income, expense, as well as expansion expectations. The plan must also demonstrate the genuine intention to be a business in Georgia.
It is important to address this issue as soon as possible.
A business plan written for investors can answer concerns like how quickly the business can expand. A business plan that is regulated must provide a clear explanation of how the company will operate in a safe 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 is not able to be added at the end
Anti-Money Laundering and Counter-Terrorism Controls for financing are among the most important components of the procedure that is described by PB Services.
The information provided specifically warns against importing policies on AML from a different country because Georgian regulations need to be integrated into the structure of the company.
The operational systems must be considered as well. The business plan needs to demonstrate that the system in place by the company can spot related and suspicious transactions from the outset.
Practically, the compliance of a product must influence its development before it is launched. The process of creating a platform before looking into what AML procedures will fit afterward could result in unnecessary rework and create delays.
The services you select can affect your capital
Capital for regulatory purposes is another reason to define the business model in advance.
As per the thresholds set forth in the source material, transfer and exchange, as well as kiosks must be at or near 150,000 GEL. Trading-platform management requires 350,000 GEL and other services covered only require 250,000 GEL. The highest threshold is required when multiple services are being offered.
It’s not the same as normal operating capital. The application has to be accompanied by proof that the amount requested was financed.
The person who is aspiring to apply for a crypto-blockchain licence in Georgia should consider the capital required by Georgia’s regulatory authorities when calculating his financial plan and not wait until the other aspects have been taken care of.
The registration process is not the end of compliance work
The approval is not the point where the compliance calendar disappears. The provided requirements detail regular obligations related to risk management and cybersecurity security, technology resilience and fraud risk, as well as records retention, independent review and complaints from customers.
For example an opinion of an independent auditor on the risk management framework should be sought within 12 months of the date of registration. The rules on handling complaints require companies to accept complaints in oral, written or electronically and then analyze them within a maximum of a month, and provide details of complaints electronically to National Bank each month.
These details can change the way an experienced license applicant approaches licensing.
Imagine a Georgian VASP Application as the style of a regulated business.
It is important that the company structure as well as the technology used, AML controls and regulatory capital, along with processes for customers, are in perfect harmony.
Georgia remains a wonderful location for crypto and fintech companies. The framework for regulation provides an established path to market. However, asking how fast you can receive an approval isn’t the best way to begin.
You should be able to clearly describe what your business’s crypto-related activities will be and show that you are prepared to adhere to Georgia’s rules.