The regulatory application should not include the following statement “We are launching a cryptocurrency platform”.
Are customers able to exchange cryptocurrency to fiat? Can the platform be used to move virtual assets? The company will be in charge of client wallets or keys? Is it managing an exchange platform or crediting against digital assets or planning to issue tokens?
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 is an ideal place for fintech firms, but getting into its highly-regulated virtual asset market is more than just registering a business and building a website.
First, you need to define the service.
In the framework outlined by PB Services, businesses providing covered services in the field of virtual assets for third-party clients must be registered as virtual asset service providers (ASP) with the National Bank of Georgia.
The scope covers activities such as virtual-asset exchange and transfer, trading-platform administration and custody or management. The regulations state that the custody concept stretches to the management of the client’s private keys or wallet.
This is what makes the design of an crypto-product important to its regulation status.
Before submitting an application for a license, a founder who is interested in obtaining an e-currency license in Georgia should map out the customer’s journey. What happens when a user deposits assets? Who owns your account? The assets can be exchanged or transferred? Which person is authorized approve transactions?
The answers that are precise and clear can help decide what the business will be doing.
Your Business Plan Must provide a realistic description of your business
VASP applications require more than a pretty pitch deck.
The National Bank will expect a thorough business plan with financial projections for at least three years. This must include the growth, expense and revenue estimates. The plan must also demonstrate that there is a genuine intention to operate within Georgia.
This is an issue which must be addressed quickly.
Investors are able to ask questions about how quickly the business will expand. A business plan for an operation that is regulated must contain details on how it will be run safely.
Georgian applicants seeking a vasp license should not view the commercial model as though it was unrelated. Instead they should link them.
AML is not possible to add at the very end
PB Services describes the preparation as a series of steps that cover anti-money laundering, as well as counter-terrorism controls.
The information warns explicitly that importing an AML Policy from a different jurisdiction is not enough since Georgian rules must be incorporated into a business’s framework.
The operational systems are important in the same way. The business plan must demonstrate that the company’s system can identify related and potentially suspicious transactions right from the beginning.
It is essential to consider compliance as a consideration in product development. Making a platform first, and looking into what AML procedures can be integrated later could result in unnecessary rework and lead to delays.
Capital Depends on the Services You Select
The necessity of establishing the business model in time is also due to regulatory capital.
In accordance with the thresholds specified in the source materials, kiosks and exchange activities require 150 000 GEL. The administration of platforms for trading is required to be 350,000 GEL and other services require 250,000 GEL. The highest threshold is required when multiple services are being offered.
It’s not as simple as ordinary operating capital. The application should be accompanied by evidence that the requested amount is financed.
An entrepreneur who plans to apply for a crypto-blockchain license in Georgia should consider regulatory capital in the course of financial planning, but not until after the remainder of the application has been completed.
Registration isn’t the only aspect of compliance work
The compliance calendar doesn’t expire with the approval. The requirements listed in the document outline continuing obligations in risk management and cybersecurity, technology resilience and fraud risk, as well as record retention, independent review and customer complaints.
A risk-management framework is one example. It must receive an opinion by an independent auditor within one months from the date of registration. In accordance with the regulations, businesses are required to accept complaints written or verbally and must review them within one month. They are also required to transmit statistics about complaints to the National Bank electronically each month.
These factors affect how serious applicants should take the licensing process.
Consider the Georgian VASP as a concept for a company instead of a collection of forms that must be filled out.
The structure of a company’s business, its service model and technology, AML controls as well the risk management procedures, regulatory capital and customer service processes have to be consistent.
Georgia is a great place to start businesses in the field of fintech and crypto and the regulatory framework is an easy way to enter the market. But asking about how quickly you can receive a license is not the most effective way to start.
It’s about being able to describe in clear terms what your company’s crypto operations will be doing and proving that the company is prepared to carry out the work within Georgia’s regulatory framework.