The regulation application should not include the statement “We are creating a cryptocurrency platform”.
Are customers able to convert cryptocurrency into fiat? Can the platform be used to transfer virtual assets? Can the company manage client wallets or private keys? Is it planning to run a trading platform or lend against digital assets?
Those differences matter when pursuing a crypto license in Georgia because the services a company intends to provide affect its regulatory preparation, documentation, controls, and capital requirements.
Georgia offers a market that is regulated for virtual assets, which is attractive to fintech companies. However, getting into this market takes more effort than simply registering your company and then launching your site.
Then, you need to define the service.
Companies that provide virtual assets services to third parties must be registered as Virtual Asset Service Providers (VASP) at the National Bank of Georgia under the structure described by PB Services.
In the scope of this are actions like virtual transfer and exchange of assets and trading platform administration and custody or management of cryptocurrency. The regulation’s information states that the custody concept extends to the administration of the clients’ private keys or wallet.
That makes the technical design of a crypto product important to its position in the regulatory system.
An entrepreneur who is interested in obtaining cryptocurrency licenses in Georgia must map out the customer’s journey prior to preparing the application. What happens after a user makes a deposit? Who owns your account? Are assets traded or transferred? Which party authorizes the transactions?
It is important to know what the firm will be doing.
Your Business Plan Should Describe a Real Company
VASP applications also require more than a pretty pitch deck.
According to the information provided in the report, the National Bank requires a detailed plan of operation that includes financial projections for an minimum of three years. This includes revenue, expense, and expansion expectations. The plan should also show an actual intention to be a part of Georgia.
This is a requirement that must be addressed quickly.
Investors can inquire about how fast the company will expand. The business plan for regulatory compliance should also describe how the operation will operate responsibly.
If a company is who are seeking a vasp license Georgia applicants should be prepared to connect the commercial model with the compliance model rather than using them as separate documents.
AML Cannot be added to the End
PB Services has described the preparation process as a major part of it is the controls to stop terrorist financing and money laundering.
The provided material specifically warns against the importation of a policy regarding AML from another jurisdiction because Georgian regulations need to be incorporated into the framework of a company.
It is also crucial to think about the operational systems. The business plan must demonstrate that the business’s system company is able to detect any suspicious transactions.
Practically, the quality of a product should influence its development before it is launched. It isn’t a good idea to develop a platform without making a decision on how AML policies will be implemented. This could result in unneeded redesigns and delays.
Capital Depends on the Services You Choose
The necessity to create a business model early is due to capital required by the regulatory authorities.
Based on the requirements set in the document of origin, exchange and transfer activities such as kiosks, need 150,000 GEL. Trading platform administration requires 350,000 GEL while other covered services need 250,000 GEL. When several services are provided the most appropriate threshold determines.
It’s not as simple as operating capital that is used for normal purposes. The application has to be accompanied by proof that the amount required has been financed.
An entrepreneur who plans to apply for a crypto-blockchain license in Georgia is required to think about regulatory capital prior to the start of financial planning but not until the rest of the application is complete.
Registration isn’t the only aspect of compliance work
The approval is not the point when the compliance calendar disappears. The requirements include ongoing obligations related to risk management, cybersecurity and technology resilience. They also cover the retention of records, independent reviews of customer complaints and record retention.
To obtain an audit-free opinion from an independent source on the risk management framework A company must sign up within twelve months. Companies must also adhere to the guidelines to handle complaints. They are required to take complaints seriously, whether they be oral, written or electronic, to review them in a maximum one-month time frame, and to send data on complaints electronically to National Bank every month.
These details can change the way a serious license applicant approaches licensing.
Instead of thinking of an Georgian VASP application as a set of documents required for obtaining permission imagine it as the design of a regulated business.
It is vital that the company structure along with the technology, AML controls and regulatory capital, along with customer processes, are in perfect harmony.
Georgia is a good place to start fintech and crypto businesses. Its regulatory framework provides an established path to market. However, asking about the speed at which you can obtain a license isn’t the best approach to begin.
It is essential to clearly describe what your business’s crypto-related activities will be and show that you’re ready to comply with Georgia’s regulations.