“We’re creating a crypto platform” isn’t the most precise description of a regulatory application.
Customers can exchange cryptocurrency in exchange for fiat? Will the platform be able to transfer virtual assets? Will the company control client wallets and private keys? Are they managing a lending platform for digital assets in the process of distributing tokens or running a trading system?
Those differences matter when pursuing a crypto license in Georgia because the services a business plans to offer affect its regulatory preparation and documentation, controls and capital requirements.
Georgia might provide a favorable location for fintech firms but to enter its market for virtual assets now requires more than simply registering a firm and launching a site.
First, you need to define the service.
Businesses offering virtual assets to third parties are required to register as Virtual Asset Service Providers to the National Bank of Georgia under the rules laid out by PB Services.
This covers virtual asset transfer and exchange, the administration of trading platforms, and the administration or custody of cryptocurrency. Importantly, according to the regulations provided the custody concept encompasses administration of a customer’s private keys and wallet.
That makes the technical design of a product in the crypto space important to its position in the regulatory system.
A business owner who would like to get an crypto license in Georgia must therefore sketch out the customer journey they intend to take before developing the application. What happens after the client deposit their money? Who controls the account? Are assets traded or transferred? Who is the one who is able to authorize a transaction?
The answers that are precise and precise help to determine what the business is doing.
Your Business Plan Should Describe a Real Company
VASP applications require more than a beautiful pitch deck.
The National Bank will expect a complete business plan that contains financial projections over minimum three years. It should include revenues, expenses and growth projections. The plan must also demonstrate that there is a genuine intention to conduct business within Georgia.
This is a requirement that needs to be considered early.
A business model written for investors will answer questions such as how quickly the company will grow. The business plan for a regulatory operation must also contain details on how it will run with care.
Businesses that seek vasp Georgia license should be prepared to link the commercial model with the compliance model, instead of considering the two documents as separate documents.
AML is not able to be added at the end
PB Services describes the preparation as a set of steps that includes anti-money laundering as well as counter-terrorism controls.
The information warns explicitly that the import of an AML Policy from another country won’t suffice since Georgian laws must be included into a business’s framework.
It is also essential to consider the operational systems. The business plan must demonstrate that the system of the business can spot related and suspicious transactions from the outset.
Practically, the compliance of a platform must affect its development prior to being launched. It is not advisable to build a platform before making a decision on how AML policies will be applied. This could result in unnecessary redesigns and delays.
Capital is dependent on the Services you choose
The need for regulatory capital is a further reason to determine the business model in advance.
In accordance with the guidelines in the sources Exchange and transfer activities including kiosks, will require 150,000 GEL. Platform management for trading requires 350,000 GEL while other covered services are only required to be 250,000 GEL. If several services are offered the threshold that is most applicable is the one that is.
This is different from operating capital or capital for investment. The application must be accompanied by proof of the amount required has been financed.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration is not the end of compliance work
The compliance calendar will not disappear with the date of approval. The obligations include continuous obligations pertaining to risk management, cybersecurity and technological resilience. They also include record retention, independent reviews customer complaints, as well as retention of records.
A risk-management system, for example, is required to receive an opinion from an independent auditor within 12 months after registration. The rules on handling complaints oblige businesses to take complaints in written, oral, or electronic form, evaluate them within a time limit of one month, and then provide the data on complaints electronically to National Bank each month.
The details of these changes affect how an applicant who is serious should approach licensing.
Instead of thinking of a Georgian VASP application as a set of forms that must be completed to get permission imagine it as a design for a regulated business.
It is essential that the corporate structure as well as the technology used, AML controls and regulatory capital, along with processes for customers, are in perfect harmony.
Georgia continues to offer opportunities for fintech and crypto companies. Its regulation framework gives businesses a clearly defined path to market. But the strongest starting point isn’t asking how quickly a license can be obtained.
It’s about being able to describe clearly what your company’s crypto operations will accomplish and showing that your company is able to operate within the Georgian legal framework.