“We’re going to launch a cryptocurrency platform” isn’t an accurate enough description of a regulatory app.
Can users exchange crypto to fiat currency? Does the platform permit the transfer of virtual assets? Is the company in charge of the wallets of clients or keys? Is it planning to run a trading platform or lend against digital assets?
The differences in these two areas are crucial when you seek the crypto license in Georgia because the services a business plans to offer determine its preparation for the regulatory process documents, controls, as well as capital requirements.
Georgia offers a market that is regulated for virtual assets that is attractive to fintech firms. However, getting into this market requires much more effort than just registering your business and launching a website.
First, you must define the service.
Under the framework described by PB Services, businesses providing covered services in the field of virtual assets for third parties must register as virtual asset service providers (ASP) with the National Bank of Georgia.
Within the scope are things like virtual transfer and exchange of assets as well as managing trading platforms and the management of crypto assets or custody. The regulations state that the concept of custody extends to the administration of client’s private keys or wallet.
This creates the need for cryptocurrency-related products relevant to their regulation status.
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 controls your wallet? Can assets be exchanged for or transferred? Who is the entity that is able to authorize a transaction?
It is important to know what the company will actually be doing.
Your Business Plan Must Describe an actual company
A VASP application requires more than an attractive pitch deck.
According to the information supplied, the National Bank expects a detailed business plan with financial projections of at least 3 years, which includes costs, revenues, and growth expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
This requirement should be addressed early.
Investors can inquire about how quickly the business will expand. The business plan for any regulatory activity must include details about how the business will be managed safely.
For businesses who are seeking a vasp license Georgia applicants should be prepared to link the commercial model to the compliance model rather than using them as separate documents.
AML is not able to be added at the conclusion
PB Services describes the preparation as a series of steps which include anti-money laundering and control of financing for terrorism.
The document specifically warns against the importation of a policy regarding AML from a different jurisdiction, as Georgian rules must be integrated into the framework of the company.
It is also important to look at the operational systems. The business plan must demonstrate that the system of the business can spot suspicious transactions.
Practically speaking, the conformity of a product should influence the development of the product before it can be launched. In the process of creating a platform and then deciding the way AML will function it can lead to delay and unnecessary changes.
The Services You Choose Can Impact Your Capital
Capital for regulatory purposes is another reason to determine the business model in advance.
Based on the requirements set in the document of origin the transfer and exchange activities such as kiosks, need 150,000 GEL. Trading-platform administration is required to be 350,000 GEL and other services need 250,000 GEL. If multiple services are offered the most appropriate threshold determines.
It’s not as simple as the normal operating capital. The evidence that the amount has actually been funded must be submitted with the application and the capital needs to be maintained throughout operations.
A founder planning to get cryptocurrency blockchain certification in Georgia should therefore think about regulatory capital when planning financial plans not until the rest of the application is put together.
Registration doesn’t end the formalization process.
The compliance calendar doesn’t end when you have approval. The obligations include continuing obligations related to risk management, cybersecurity and technology resilience. They also address the retention of records, independent reviews, customer complaints, and records retention.
To obtain an audit-free opinion from an independent source on the risk management framework the company must be registered within 12 months. According to the rules, businesses must accept complaints either in written or oral form and then review them within a month. They must also provide a report of complaints to the National Bank electronically each month.
These factors affect how serious applicants should take the licensing process.
Instead of thinking of a Georgian VASP application as a set of forms required to obtain permission imagine it as the style of the business that is regulated.
The company’s structure, model of service model, and technology, AML controls as well regulatory capital, risk procedures and customer service processes have to be coherent.
Georgia is a good place to start fintech and crypto companies. The framework for regulation provides an easily-defined route to the market. However, asking when you can get a license isn’t the best approach to begin.
It’s being able, with specificity, detail what your crypto company plans to do and to be able to demonstrate that the business is operating within the Georgian legal framework.