“We’re going to launch a cryptocurrency platform” isn’t a precise enough description of a regulatory application.
Are customers able to exchange cryptocurrency against fiat? Will the platform allow virtual assets to be transferred? Will the company control client wallets or private keys? Will it manage the trading platform or lend against digital assets?
These differences are essential when applying for the crypto-license in Georgia since the services that a company plans to offer will affect its requirements for regulatory compliance, documentation, control, and capital requirements.
Georgia has a legal market for virtual assets, which is appealing to fintech companies. However, entering this market is more difficult than simply registering your business and launching a website.
Definition of the term “service”
Businesses offering virtual asset services to third parties as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
The scope covers activities like exchange of virtual assets and transfer, platform administration for trading as well as cryptocurrency custody management. In addition, as per the regulation information the concept of custody includes administration of a customer’s private keys and wallet.
This makes the design of a crypto-product important to its position in the regulatory system.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens after the client deposits their assets? Who owns your wallet? Can assets be transferred or exchanged? Who is the one who authorizes a transaction?
It is important to be clear in your answers to determine what the company will actually do.
Your Business Plan Must be able to describe a real-world 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 at least three years. The plan should contain the growth, expense and revenue assumptions. The plan must also reflect a genuine intention to operate in Georgia.
This need should be taken seriously and addressed as early as possible.
Investors can ask questions like what speed the company will expand. The business plan of an operation that is regulated must contain information about how it will run responsibly.
For businesses that are looking for a license to use vasp Georgia applicants must be able to link the commercial model with the compliance model, rather than considering them separate documents.
AML cannot be added to the End
PB Services describes the preparation as a series of actions that include anti-money laundering and control of financing for terrorism.
The document warns that the importation of an AML Policy from another country won’t suffice since Georgian laws must be included into a business’s framework.
The operational systems are important also. The business plan should show that the systems of the firm can identify suspicious or related transactions.
Practically, the compliance of a product has to influence the development of the product before it can be launched. It is not advised to build a platform before deciding on how AML policies will be implemented. This can lead to unneeded redesigns and delays.
Capital is dependent on the Services you Choose
Knowing the business model at an early stage is vital for a variety of reasons, such as regulatory capital.
In accordance with the requirements in the source material, exchange and transfer, including kiosks must be at the minimum of 150,000 GEL. The administration of trading platforms is required to be 350,000 GEL and other covered services require 250,000 GEL. If a variety of services are available the threshold which is highest applies.
This is different from regular capital for investment or operating. The evidence that the amount was actually paid for must be submitted with the application and the capital must be maintained throughout the course of operations.
Anyone who wants to get a crypto blockchain license in Georgia should therefore think about regulatory capital as part of financial planning and not once the rest the application has been made.
Registration isn’t the end of formalization process.
The approval is not the point where the compliance calendar disappears. The guidelines provide regular obligations that involve risk management, cybersecurity, technological resilience and risk of fraud, recording retention, independent review and customer complaints.
For example an opinion of an independent auditor on the risk management framework should be obtained within 12 months of the date of registration. The guidelines for handling complaints stipulate that businesses must accept complaints in written, oral or electronic formats and examine them within a period of a month, and submit information about complaints electronically to the National Bank each month.
These details can change the way an experienced license applicant is approached when it comes to licensing.
Imagine the Georgian VASP as a visual design for a business instead of a collection of forms that need to be filled out.
The company structure, service model and technology AML controls, regulatory capital, risk procedures, and customer processes have to integrate.
Georgia continues to present opportunities for crypto and fintech companies, and its regulatory framework offers a clear pathway to the market. However, asking about the speed at which you can get an approval isn’t the best way to begin.
It’s explaining precisely what your crypto business will accomplish and showing that your business is prepared to conduct it within Georgia’s regulatory framework.