The regulation application should not include the following statement “We are creating a cryptocurrency platform”.
Can customers convert cryptocurrency to fiat? Will the platform be able to transfer virtual assets? The company will be able to control clients’ wallets or private keys? Are they administering an online asset lending platform and issuing tokens, or running a trading system?
Those differences matter when pursuing an crypto license in Georgia due to the services that a business plans to offer influence its regulatory preparation, documentation, controls, as well as capital requirements.
Georgia might provide a favorable setting for fintech companies but to enter its virtual-asset marketplace now requires more than simply registering your company and launching a site.
Defining the scope of service
Under the framework described by PB Services, businesses providing covered virtual-asset service to third-party clients must be registered as Virtual Asset Service Providers with National Bank of Georgia.
Within the scope are the activities of virtual asset exchange and transfer and trading platform administration and the management of crypto assets or custody. Importantly, according to the information provided by the regulator the concept of custody encompasses management of a client’s personal key and wallet.
This makes the design of an crypto-product important to its legal status.
Before submitting an application for a license the founder seeking an e-currency permit in Georgia must outline the customer’s journey. What happens after a user deposits funds? Who owns the wallet? Can assets be exchanged, or transferred? Which authority authorizes the transactions?
It is important to know the exact nature of what the business will be doing.
Your Business Plan Needs to Describe the real business
A VASP application requires more than an attractive pitch deck.
According to the information supplied according to the information provided, the National Bank requires a detailed plan of business with financial projections for a minimum period of three years. They include income, expense, as well as expansion expectations. The plan must also demonstrate genuine intent to be a business in Georgia.
This is a requirement that needs to be considered early.
A business plan written for investors answers concerns like how quickly the business can expand. A regulatory business plan must also explain how the operation will function responsibly.
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 conclusion
PB Services has described the procedure of preparation as a significant component of which is the controls against the financing of terrorists and money laundering.
The material provided specifically warns that simply import of an AML policy from another jurisdiction is not enough since Georgian requirements need to be integrated into the firm’s framework.
The operational systems are important. The business plan should show that the systems of the firm can identify suspicious transactions or those that may be related to them.
It is essential to consider compliance as an element in the development of products. Building a platform first and asking how AML procedures fit later will result in unnecessary redesigns and create delays.
Capital Depends on the Services You Choose
Knowing the business model in the earliest possible time is crucial for a variety of reasons, not least the need for regulatory capital.
As per the requirements in the source materials for transfer and exchange, as well as kiosks have to be at the minimum of 150,000 GEL. Administration of trading platforms requires 350,000 GEL, while other covered services require 250,000 GEL. When multiple services are provided, the highest applicable threshold determines.
This is separate from ordinary capital investment or operating capital. A proof that the requested amount is actually funded must accompany the request. Likewise, the capital has to be maintained throughout operation.
An entrepreneur who plans to apply for a crypto blockchain license in Georgia needs to consider regulatory capital prior to the start of financial planning, but not after the rest of the application is completed.
Registration isn’t the only aspect of the compliance process.
Approval isn’t the time at which the compliance calendar disappears. The required requirements outline the ongoing obligations for cybersecurity and risk management, technology resilience and risk of fraud as well as record retention, independent review and customer complaints.
In order to receive an audit report from an independent auditor on the risk management framework, a company must register within 12 months. The rules state that companies must take complaints in writing or in 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 a serious applicant should approach licensing.
Instead of thinking of an Georgian VASP application as a set of documents required to obtain permission, think of it as the structure of an regulated business.
A company’s structure, service model and the technology used, AML controls as well processes for regulating capital, risk and customer processes must all be in sync.
Georgia is a good place for fintech and crypto companies. Its regulatory framework offers an easy path to market. However, the best starting point isn’t to ask how fast the license will be granted.
It’s describing clearly what your crypto business will be doing and proving that your business is prepared to operate within the Georgian legal framework.