The regulatory application should not include the statement “We are creating a cryptocurrency platform”.
Are customers able to exchange cryptocurrency to fiat? The platform will be able to move virtual assets? Does the company have control of wallets for clients or keys? Is it planning to run a trading platform or lend against digital assets?
These differences are important when applying for the crypto-license in Georgia since the services that a company plans to provide will affect the requirements of its regulators such as documentation, control and capital requirements.
Georgia may offer an attractive setting for fintech companies however, entering the virtual-asset market now requires much more than simply registering your company and creating a website.
First, define the service
Businesses offering virtual assets to third-party clients are required to be registered as Virtual Asset Service Providers with the National Bank of Georgia under the structure described by PB Services.
This covers virtual asset transfer and exchange, the administration of trading platforms, as well as custody or management of cryptocurrency. The information on regulation states that the custody concept extends to the administration of the client’s private keys, or wallet.
The design and technical aspects of the product in question is crucial to its status with respect to regulation.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when a client makes a deposit of funds? Who owns the wallet? Can assets be traded or transferred? Which person is authorized approve transactions?
Clare answers can help define what the business is actually going to be doing.
Your Business Plan Has to describe a real business
VASP applications also require more than a beautiful pitch deck.
Based on the information provided The National Bank expects a detailed business plan with financial projections for at least three years, including revenue, expenses, and growth projections. The plan must also indicate an actual intention to operate in Georgia.
This is an issue that deserves to be addressed quickly.
A business plan designed for investors will address questions such as: How fast will the company expand? The plan of business for regulation should include a description of how the business will run in a responsible manner.
Georgian applicants for a vasp licence should not treat the commercial model as if it was unrelated. Instead they should be able to connect them.
AML cannot be added to the end
The Anti-Money Laundering as well as the Counter-Terrorism Financing control is among the main components of the procedure that is described by PB Services.
The provided material warns that simply taking an AML policy from another country isn’t enough because Georgian laws must be incorporated into the business’ structure.
It is also crucial to think about the operational systems. Business plans must show that the system in place by the company can spot related and suspicious transactions from the start.
Practically, the compliance of a platform must affect its design before it’s released. It isn’t a good idea to develop a platform without making a decision on how AML policies will be applied. This could result in unnecessary redesigns and delays.
Capital is contingent on the Services you select
The need to develop an early business plan is also due to the capital required by the regulatory authorities.
As per the thresholds set out in the document, exchange and transfer activities such as kiosks, need 150,000 GEL. Management of a trading platform for trading needs 350,000 GEL and other covered services need 250,000 GEL. If several services are offered the threshold that’s highest applies.
It’s not the same as normal operating capital. The application has to be accompanied by evidence that the requested amount was financed.
The founder who plans to obtain a the crypto blockchain license in Georgia is advised to consider the possibility of regulatory capital in financial planning not after the rest of the application is completed.
Registration Doesn’t Finish the Compliance Work
Approval is not the point at which the compliance calendar goes away. It is a requirement that includes ongoing obligations related to cybersecurity, risk management and technological resilience. They also address records retention, independent reviews customer complaints, as well as records retention.
For example an opinion of an independent auditor on the risk management framework should be obtained within 12 months from the time of registration. According to the rules, businesses must accept complaints either written or verbally and then review them within a month. Additionally, they must provide a report of complaints to the National Bank electronically each month.
These aspects can alter the way that a serious license applicant is approached when it comes to licensing.
Consider the Georgian VASP as a visual design for a business rather than a series of forms that need to 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 in harmony.
Georgia remains a wonderful location for crypto and fintech companies. The framework for regulation provides a well-defined path to the market. But the most effective starting point isn’t determining how quickly it is possible to obtain a license.
You must be able clearly describe what your crypto-business is planning to do and show that you’re able to adhere to Georgia’s rules.