It’s not precise enough to describe a legal application as “We’re creating our own crypto platform”.
Customers can exchange crypto for fiat currency? Can the platform transfer virtual assets? Can the company manage client wallets and private keys? Is it planning to run a trading platform, or loan against digital assets?
These distinctions are critical when applying for an crypto-license in Georgia since the products and services a business plans to provide will impact its requirements for regulatory compliance such as documentation, control and capital requirements.
Georgia has a legal market for virtual assets that is attractive to fintech companies. However, gaining access to this market takes more effort than simply registering a company and then launching your site.
Definition of the service
In the framework outlined by PB Services, businesses providing covered virtual-asset services for third parties are required to register as virtual asset service providers to the National Bank of Georgia.
The scope includes activities such as virtual-asset exchange and transfer, administration of trading platforms as well as cryptocurrency custody management. The information on regulation states that the concept of custody extends to the administration of the client’s private keys, or wallet.
That makes the technical design of a cryptocurrency important to its position in the regulatory system.
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 customer makes a deposit of funds? Who owns the account? The assets can be exchanged or transferred? Which authority authorizes the transactions?
Clarity in the answers helps to determine what the company will actually accomplish.
Your business plan must describe the actual business
VASP applications require more than a beautiful pitch deck.
According to the supplied information according to the provided information, the National Bank expects a detailed business plan that includes financial projections covering at least three years, including the cost of operations, revenue, and growth forecasts. The plan must also indicate a genuine intention to operate in Georgia.
This is an issue that deserves to be addressed as soon as possible.
Investors are able to ask questions about how quickly the business will expand. A regulatory business plan must provide a clear explanation of how the company will be conducted in a responsible manner.
For businesses who are seeking a vasp license Georgia applicants should be prepared to link the commercial model to the compliance model rather than thinking of them as separate documents.
AML cannot be added at the very end
PB Services has described the procedure of preparation as a significant part of it is the measures to prevent financial crime and the financing of terrorists.
The material provided specifically warns that simply importing an AML policy from another country is not enough since Georgian laws must be incorporated into the company’s framework.
It is also important to consider the operational systems. The business plan needs to demonstrate that the company’s systems can detect similar and suspicious transactions from the outset.
In practice it is essential that compliance be a factor in the product’s development prior to its launch. It is not advised to develop a platform without making a decision on how AML policies will be applied. This could result in delay and unnecessary changes.
The Services You Select Can Change Your Capital
The necessity to create an early business plan is also due to the capital required by the regulatory authorities.
In accordance with the criteria set out in the source material, transfer and exchange, as well as kiosks must be at or near 150,000 GEL. Management of platforms for trading needs 350,000 GEL however other covered services need only 250,000 GEL. If multiple services are provided the threshold which is the highest is used.
This is different from regular capital used for investment or operational purposes. Proof that the required amount is actually paid for must accompany the request. Likewise, the capital must be maintained throughout operation.
A founder planning to get crypto blockchain license in Georgia should consequently consider the possibility of regulatory capital in financial planning not until the rest of the application has already been completed.
The registration process is not the end of the compliance process.
The compliance calendar does not end when you have approval. The requirements provided outline regular obligations that involve risk management, cybersecurity, technological resilience and fraud risk, as well as recording retention, independent review as well as customer complaints.
In order to receive an independent audit opinion regarding the risk management framework the company must be registered within 12 months. The rules state that businesses are required to accept complaints in written or oral form and then review them within a month. Additionally, they must transmit statistics about complaints to the National Bank electronically each month.
These aspects can alter the way in which a serious applicant is approached when it comes to licensing.
Consider the Georgian VASP as a style for a company rather than a set of forms to fill out.
It is essential that the corporate structure as well as the technology used, AML controls and regulatory capital, along with customer processes, are all in harmony.
Georgia is still a great place for fintech and crypto businesses. Its regulatory framework offers a well-defined path to the market. But the most effective starting point isn’t asking how quickly an approval can be obtained.
It’s about being able in a specific manner, to describe what your crypto business plans to do and to demonstrate that the company will be operating in accordance with the legal framework of Georgia.