“We’re in the process of launching a crypto-based platform” isn’t an accurate enough description for a regulatory application.
Are customers able to exchange cryptocurrency in exchange for fiat? Can the platform allow the transfer of virtual assets? Do they have access to client wallets as well as private keys? Will it manage the trading platform or lend against digital assets?
These distinctions are crucial when obtaining an cryptocurrency license to operate in Georgia. The type of service the business plans to offer affects its regulatory preparation, documents controls, and capital requirements.
Georgia offers a market that is regulated for virtual assets, which attracts fintech companies. However, entering the market requires much more effort than simply registering a company and launching a website.
First, define the Service.
Based on the model described by PB Services, businesses providing covered virtual-asset services for third parties are required to register as virtual asset service providers with the National Bank of Georgia.
In the scope of this are the activities of virtual transfer and exchange of assets as well as management of trading platforms and the management of crypto assets or custody. According to the regulation information the concept of custody encompasses administration of the customer’s private key and wallet.
The technical design of a cryptocurrency relevant to its regulatory status.
Before submitting an application for a license the founder interested in getting an e-currency license in Georgia must sketch out the customer journey. What happens after the client makes a deposit of their funds? Who controls the wallet? Are assets able to be transferred or exchanged? Who is the party that approves the transaction?
A clear understanding of the answers is helpful to determine what the company is actually doing.
Your business plan must describe the real-world business
VASP applications need more than just an appealing pitch deck.
The National Bank will expect a thorough business plan with projections of financials for minimum three years. It should include revenue, expenses and growth assumptions. The plan must also demonstrate an actual intention to be operational within Georgia.
It is crucial to tackle this issue as soon as you can.
A business plan designed to be used by investors addresses questions about how quickly the business can expand. The regulatory business plan should include a description of how the business is to be run 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 Does not qualify for inclusion in the End
PB Services has described the preparation process as a major part of which are the controls against terrorist financing and money laundering.
The provided material specifically warns against the importation of a policy on AML from another jurisdiction because Georgian AML regulations must be integrated into the framework of the company.
It is also essential to look at the operational systems. The business plan needs to prove that the company’s system is able to identify potential suspicious transactions as well as related transactions.
The compliance aspect must be an element in the development of products. Building a platform first and asking how AML procedures fit later could lead to unnecessary changes and create delays.
Capital is contingent upon the Services you choose
Capital for regulatory purposes is another reason to determine the business model before.
According to the thresholds in the source materials, kiosks and exchange activities need 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 which is highest applies.
It’s not as simple as normal operating capital. The application must be supported by evidence that the required amount has been financed.
An entrepreneur who plans to submit an application for a crypto-blockchain license in Georgia is required to think about regulatory capital prior to the start of financial planning, not until the rest of the application is complete.
The registration process is not the end of the compliance process.
The compliance calendar cannot disappear at the moment of approval. The requirements provided outline the ongoing obligations in risk management, cybersecurity technological resilience, fraud risk, records retention, independent review and complaints from customers.
For example, an independent auditor’s opinion regarding the risk-management system must be obtained within 12 months from the time of registration. Businesses also must follow the rules set out regarding handling complaints. They are required to accept all complaints, whether they are written, oral or electronic, to look over them within a one-month time frame, and to send figures on complaints submitted electronically to National Bank every month.
These details affect how an experienced applicant approaches licensing.
Consider the Georgian VASP as a visual design for a company rather than a series of forms to be filled out.
It is important that the organization’s structure as well as the technology used, AML controls and regulatory capital, as well as customer processes, are all in perfect harmony.
Georgia has opportunities for businesses in the field of fintech and crypto and the legal framework is an easy way to enter the market. However, the best starting point isn’t about how fast the license will be granted.
It’s about being able to describe in clear terms what your cryptocurrency business plans to do and demonstrating that your business is prepared to conduct it within the Georgian legal framework.