“We’re creating a crypto platform” isn’t a precise enough description of a regulatory app.
Can users convert cryptocurrency into fiat? The platform will be able to move virtual assets? The company will be in charge of the wallets of clients or keys? Is it managing the trading platform or lending against digital assets or planning to issue tokens?
These differences are important when applying for the crypto-license in Georgia due to the services a company plans to provide will impact its requirements for regulatory compliance, documentation, control, and capital requirements.
Georgia is an ideal place for fintech firms, but getting into its highly-regulated virtual asset market is more than just registering your company and establishing a website.
First, you need to define the service.
Based on the model described by PB Services, businesses providing covered virtual-asset service to third parties are required to register as Virtual Asset Service Providers with the National Bank of Georgia.
The scope includes things like virtual transfer and exchange of assets and management of trading platforms and cryptocurrency management or custody. Importantly, the supplied regulation states that the concept of custody also applies to the administration of a customer’s private wallet or key.
This makes the design of the crypto-product relevant to its regulation status.
A founder interested to obtain cryptocurrency licenses in Georgia must map out the customer’s journey in making the request. What happens after a user deposits funds? Who manages your account? Can assets be exchanged, or transferred? Who is the person who authorizes a transaction?
It is important to know the exact nature of what the business will be doing.
Your business plan must detail an actual business
A VASP application also needs more than an attractive pitch deck.
According to the provided information The National Bank expects a detailed business plan that includes financial projections covering at least three years, including costs, revenues, and growth expectations. The plan must also demonstrate an actual intention to operate in Georgia.
This is a problem which must be addressed in the earliest possible time.
Investors can inquire about how quickly the business will expand. The plan of business for regulation should be able to describe how the company 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 is not able to be added at the end
The Anti-Money Laundering as well as the Counter-Terrorism Controls on financing are among the most substantial parts of the procedure that is described by PB Services.
The material warns specifically that the import of an AML Policy from another country is not enough since Georgian regulations must be integrated into the company’s structure.
It is equally important to consider the operational systems. Business plans must show that the company’s systems can spot related and suspicious transactions at the very beginning.
In practice the compliance process should influence the product’s development prior to its launch. It isn’t a good idea to create a platform prior to deciding how AML policies are to be implemented. This could lead to costly redesigns and delays.
The services you select can Have an impact on your Capital
The business model should be determined at an early stage is important for a number of reasons, including regulatory capital.
Based on the thresholds set forth in the source material for exchange and transfer, including kiosks, they must have at or near 150,000 GEL. Trading platform administration is required to be 350,000 GEL, while other covered services require 250,000 GEL. When multiple services are provided the most relevant threshold is the one to be used.
This is distinct from normal operating or investment capital. Documentation that proves the required amount was actually paid for must be submitted with the application and the capital needs to be maintained throughout operations.
The founder who wants to apply for a crypto-blockchain licence in Georgia should therefore take into consideration the capital required by Georgia’s regulatory authorities when planning his finances and not wait until the rest has been completed.
The registration process is not the end of compliance work
The compliance calendar does not end with approval. The guidelines outline regular obligations related to risk management and cybersecurity as well as technology resilience and fraud risk, as well as the retention of records, independent reviews and customer complaints.
For example an independent auditor’s view regarding the risk-management framework has to be sought within 12 months from the time of registration. In accordance with the regulations, companies must take complaints written or verbally and then review them within a month. They must also provide a report of complaints to the National Bank electronically each month.
These details affect how an applicant who is serious should approach licensing.
Imagine the Georgian VASP as a style for a business instead of a collection of forms to fill out.
The company’s structure, model of service model and technology, AML controls as well processes for regulating capital, risk and customer procedures must be consistent.
Georgia continues to present opportunities for crypto and fintech companies. Its regulatory framework is a well-defined path to market. But the strongest starting point isn’t determining how quickly an approval can be obtained.
You must be able to clearly describe what your business’s crypto-related activities will be and prove that you’re ready to abide by Georgia’s laws.