The regulatory application shouldn’t include the phrase “We are creating a cryptocurrency platform”.
Customers can exchange crypto for fiat currency? Will the platform be able to move virtual assets? Do they have access to client wallets as well as private keys? Do they plan to manage an exchange 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 could be a desirable business environment for fintech companies however, gaining access to its controlled virtual-asset market now requires much more than simply registering your company and launching a site.
First, you need to define the service.
Businesses providing virtual-assets services for third parties are required to become Virtual Asset Service Providers at the National Bank of Georgia under the framework described by PB Services.
Within the scope are things like virtual transfer and exchange of assets and the administration of trading platforms as well as cryptocurrency management or custody. It is important to note that the provided regulation states that the custody concept extends to the management of a user’s private wallet or key.
The technical design of a crypto product relevant to its regulatory status.
A founder interested in obtaining cryptocurrency licenses in Georgia should thus map out the intended customer journey prior to developing the application. What happens when a customer makes a deposit of funds? Who manages the wallet? Can assets be traded, or transferred? Which party is authorized to approve transactions?
The answers are clear and help determine what the company will actually be doing.
Your Business Plan Should Describe a Real Company
VASP applications require more than just a visually appealing pitch deck.
The National Bank will expect a comprehensive business plan that includes financial projections that last minimum three years. This must include income, expenses and growth expectations. The plan must also prove an actual intention to conduct business within Georgia.
This is a problem which must be addressed early.
A business plan that is written for investors will answer questions like: How quickly will the company expand? The business plan for regulatory compliance should also describe how the operation will operate responsibly.
Georgians applying for a VASP licence should not treat the commercial model as if it was unrelated. Instead, they should connect them.
AML is not able to be added at the End
PB Services has described the preparation process as an important component of which is the measures to prevent financial crime and the financing of terrorists.
The information provided specifically warns against importing policies on AML from a different jurisdiction, as Georgian regulations need to be integrated into the framework of a firm.
The operational systems are crucial. The business plan should demonstrate that the business’s system business can spot related or potentially suspicious transactions.
Compliance needs to be a consideration in product development. By creating a platform, then deciding the way AML will work in the future, you risk causing inefficient delays and have to redesign.
Capital is contingent on the Services you Choose
The necessity to create an early business model is a result of the capital required by the regulatory authorities.
Based on the thresholds set in the documents, kiosks and exchanges require 150 000 GEL. Administration of trading platforms needs 350,000 GEL in addition to other covered services need 250,000 GEL. The most stringent thresholds apply for multiple services.
This is separate from ordinary operating or investment capital. The application should be accompanied by proof of the amount requested was financed.
A founder planning to get the crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning and not once the rest the application is completed.
Registration doesn’t end the formalization process.
The approval is not the point at which the compliance calendar disappears. The provided requirements outline the ongoing obligations in cybersecurity, risk management, technological resilience and fraud risk, as well as records retention, independent reviews and complaints from customers.
A risk-management framework such as a risk management framework, for instance, will require an opinion from an independent auditor within 12 months after registration. Companies must also adhere to the guidelines for handling complaints. They are required to accept all complaints, whether they be oral, written or electronic, and to examine them within a one-month period, and provide figures on complaints submitted electronically to National Bank every month.
These factors affect how serious applicants must take the licensing process.
Instead of thinking of an Georgian VASP application as a collection of forms required to obtain permission imagine it as the structure of an regulated business.
It is essential that the organization’s structure and technology, AML controls and regulatory capital, as well as processes for customers, are in perfect harmony.
Georgia is a good location for crypto and fintech businesses. Its regulatory framework offers an easy path to market. However, the best starting point isn’t asking how quickly the license will be granted.
It’s about being able to describe precisely what your crypto business will perform and showing that your company is able to do it within Georgia’s regulatory framework.