The regulation application should not include the following statement “We are launching a cryptocurrency platform”.
Customers can convert cryptocurrency to fiat? Can the platform transfer virtual assets? The company will have control over the wallets of clients and private keys? Is it planning to run a trading platform or lend against digital assets?
These distinctions are crucial when applying for a crypto-license within Georgia since the services a company plans to provide will impact its legal requirements documents, controls, and capital requirements.
Georgia could be a desirable business environment for fintech companies however, gaining access to its controlled market for virtual assets now requires more than simply registering a firm and launching a website.
First, Define the Service
Businesses that offer virtual-assets services to third party clients must sign up as Virtual Asset Service Providers to the National Bank of Georgia under the guidelines laid out by PB Services.
The scope includes the activities of virtual transfer and exchange of assets and trading platform administration and the management of crypto assets or custody. Importantly, according to the regulations provided the concept of custody includes the administration of a client’s private keys and wallet.
The technical specifications of the product in question is crucial to its status as a result of regulations.
A business owner who would like to get cryptocurrency licenses in Georgia must therefore sketch out the intended customer journey prior to preparing the application. What happens after a client deposits assets? Who owns your account? Can assets be traded or transferred? Who is the one who authorizes a transaction?
Specific and clear can help decide what the business is doing.
Your Business Plan Needs to be able to describe a real-world business
VASP applications also require more than just a gorgeous pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections over at least three years. The plan should contain income, expenses and growth assumptions. The plan should also show an actual intention to be a part of Georgia.
This is a requirement that needs to be considered early.
Investors can ask questions like how fast the business will expand. The plan of business for regulation should include a description of how the business will run in a responsible manner.
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 cannot be added to the end
PB Services has described the preparation process as an important element of the measures to prevent financial crime and the financing of terrorists.
The material warns specifically that the importation of an AML Policy from another jurisdiction will not be enough as Georgian requirements must be incorporated into a company’s framework.
The operational systems are important as well. The business plan needs to demonstrate that the company’s system can spot related and suspicious transactions from the start.
In practical terms it is essential that compliance be a factor in the development of products prior to launching. It is not advised to create a platform prior to deciding how AML policies will be applied. This could result in costly redesigns and delays.
Capital is contingent on the Services You Select
Determining the business model in the earliest possible time is vital for a variety of reasons, including regulatory capital.
According to the thresholds in the source materials, kiosks and exchange activities require 150 000 GEL. Management of trading platforms requires 350,000 GEL however other covered services only require 250,000 GEL. If several services are offered the threshold which is highest applies.
It’s not as simple as ordinary operating capital. Documentation that proves the required amount was actually funded is required with the application and the capital has to be maintained throughout the course of operations.
The founder who wants to obtain a crypto-blockchain license in Georgia should consider the capital required by Georgia’s regulatory authorities when planning his finances and not wait until the other aspects have been taken care of.
Registration is not the end of compliance work
Approval is not the point when the compliance calendar disappears. The requirements include ongoing obligations related to risk management, cybersecurity and technological resilience. They also cover records retention, independent reviews, customer complaints, and record retention.
To get an independent audit opinion on the risk management framework, a company must register within twelve months. The guidelines for handling complaints require companies to accept complaints in oral, written or electronic formats and to review them within a maximum of a month, and send complaint statistics electronically to the National Bank each month.
Those details change how an applicant who is serious should approach licensing.
Consider the Georgian VASP as a design for a company rather than a series of forms that must be filled out.
It is crucial that the structure of the company and technology, AML controls and regulatory capital, as well as customer processes, are all in harmony.
Georgia continues to offer opportunities for crypto and fintech businesses, and its regulation framework gives businesses a clearly defined path to market. But the most effective starting point isn’t determining how quickly it is possible to obtain a license.
It’s the ability, in specific terms, to define what your crypto business intends to accomplish and show that your business will be doing so within the Georgian legal framework.
