“We’re in the process of launching a crypto-based platform” isn’t a clear enough description of a regulatory application.
Customers can convert cryptocurrency to fiat? Will the platform allow virtual assets to be transferred? Can the company manage client wallets or private keys? Are they administering a lending platform for digital assets and issuing tokens, or running a trading system?
Those differences matter when pursuing an crypto license in Georgia because the services a company intends to provide affect its regulatory preparation as well as documentation, controls and capital requirements.
Georgia offers a market that is regulated for virtual assets, which is appealing to fintech companies. However, entering the market requires much more effort than simply registering your company and launching a website.
Defining the term “service”
Businesses that offer virtual asset services to third-party clients as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
In the scope of this are actions like virtual asset exchange and transfer and management of trading platforms and cryptocurrency management or custody. The important thing to note is that the regulation states that the custody concept also extends to the management of a user’s private wallet or key.
The technical specifications of the crypto product is crucial to its status as a result of regulations.
Before submitting an application for a license, a founder who is interested in getting an e-currency license for Georgia must sketch out the customer journey. What happens after a customer deposits funds? Who owns your wallet? The assets can be exchanged or transferred? Who is the entity that authorizes a transaction?
Answers that are specific and precise help to determine what the business is doing.
The business plan you create must outline a real business
A VASP application needs more than an attractive pitch deck.
Based on the information provided The National Bank expects a detailed business plan with financial projections of at least 3 years, which includes the cost of operations, revenue, and growth projections. The plan must also prove a real intent to be operational within Georgia.
It is vital to address this issue as soon as possible.
A business model designed to be used by investors addresses questions such as how quickly the company will grow. The regulatory business plan should be able to describe how the company is to be run responsibly.
Businesses that seek vasp Georgia license must prepare to link the commercial model and the compliance model rather than considering the two documents as separate documents.
AML Does not qualify for inclusion in the end
PB Services has described the preparation process as a major element of the controls to stop terrorist financing and money laundering.
The document specifically states that simply taking an AML policy from another state is insufficient because Georgian requirements need to be incorporated into the company’s framework.
The operational systems are important in the same way. Business plans must show that the system of the business is able to detect related and suspicious transactions at the very beginning.
Compliance needs to be a factor in product development. In the process of creating a platform and then deciding the way AML can be implemented it can lead to unnecessary delays and redesign.
Capital is contingent on the Services you select
Another reason is regulatory capital. to identify the business model earlier.
Based on the thresholds set in the source materials, kiosks and exchange activities are required to be 150 000 GEL. Trading platform administration requires 350,000 GEL and other covered services require 250,000 GEL. If multiple services are offered the threshold that is the most applicable determines.
This is separate from ordinary capital investment or operating capital. The application has to be accompanied by proof that the amount requested was 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 isn’t the end of compliance work
Approval isn’t the time where the compliance calendar ceases to exist. It is a requirement that includes continuing obligations related to risk management, cybersecurity and technology resilience. They also include records retention, independent reviews, customer complaints, and retention of records.
A risk-management system such as a risk management framework, for instance, must receive an opinion from an independent auditor within a month of registration. The guidelines for handling complaints stipulate that businesses must accept complaints in written, oral or in electronic format, review them within a maximum of a month, and send complaint statistics electronically to the National Bank each month.
The details of these changes affect how a serious applicant should approach licensing.
Instead of thinking of a Georgian VASP application as a set of forms required to obtain permission to use it, think of it as a design for the business that is regulated.
The structure of the company, its service model, technology, AML controls, regulatory capital, risk procedures, and customer processes need to be able to work together.
Georgia is still a great place to start fintech and crypto businesses. The framework for regulation provides an established path to market. But the most effective starting point isn’t determining how quickly a license can be obtained.
It’s explaining in clear terms what your company’s crypto operations will accomplish and showing that your company is able to carry out the work within Georgia’s regulatory framework.