“We’re going to launch a cryptocurrency platform” isn’t a precise enough description of a regulatory application.
Can users exchange crypto to fiat currency? Does the platform permit the transfer of virtual assets? Do they have control over the wallets of clients and private keys? Do they manage a digital asset lending platform that issues tokens or running a trading system?
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 is a great place to start fintech businesses, however to enter its regulated virtual asset market is more than registering a business and building a website.
Then, you must define the Service.
Companies that offer virtual assets services to third parties according to the model described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
The scope includes activities such as virtual-asset exchange and transfer, trading-platform administration and custody or management. The regulations state that the concept of custody extends to the management of a client’s private keys or wallet.
The technical design of a crypto product relevant to its regulatory status.
Before submitting an application for a license for a business founder interested in getting an e-currency licence in Georgia must sketch out the customer’s journey. What happens after a user makes a deposit? Who is the person who controls the wallet? Are assets able to be traded or transferred? Who is the person who authorizes a transaction?
Questions that are precise and clear will help you determine what the company will be doing.
Your business plan must detail the actual business
A VASP application also requires more than an attractive pitch deck.
The National Bank will expect a complete business plan that contains financial projections over at least three years. It should include revenue, expenses and growth assumptions. The plan must also demonstrate that there is a genuine desire to do business in Georgia.
This requirement should be addressed early.
A business model written to be used by investors addresses questions about how quickly the business can expand. The regulatory business plan should include a description of how the business will run in a responsible manner.
If a company is who are seeking a vasp license Georgia applicants should be prepared to connect the commercial model to the compliance model instead of considering them separate documents.
AML can’t be added at the End
Anti-Money Laundering and Counter-Terrorism Financing control is among the most important components of the process that is described by PB Services.
The information provided specifically warns against simply importing a policy regarding AML from a different jurisdiction, as Georgian regulations need to be integrated into the structure of a company.
Furthermore, the operating systems are essential. The business plan needs to show that the system can recognize potentially suspicious and related transactions.
Practically speaking, the conformity of a product must influence its design before it’s released. By creating a platform, then determining how AML can be implemented in the future, you risk causing unnecessary delays and even redesign.
Capital is contingent on the Services You Choose
Regulatory capital is another reason to establish the business model early.
Based on the thresholds set in the sources, kiosks and exchange activities are required to be 150 000 GEL. Trading-platform management requires 350,000 GEL whereas other covered services require only 250,000 GEL. If there are multiple services offered the threshold which is most affluent applies.
This is different from normal operating capital or capital invested. Documentation that proves the required amount has actually been funded is required with the application and the capital must remain in operation throughout its duration.
The founder who wishes to apply for a crypto-blockchain licence in Georgia must take into account the capital required by Georgia’s regulatory authorities when planning his finances before the rest has been completed.
Registration doesn’t complete the compliance process.
The calendar of compliance does not end with approval. The guidelines outline continuing obligations in risk management and cybersecurity as well as technology resilience and fraud risk, as well as record retention, independent review and complaints from customers.
To obtain an independent audit opinion on the risk management framework companies must register within 12 months. Businesses must also follow the rules set out to handle complaints. They are required to accept all complaints, whether they be oral, written or electronic, and to examine them within a minimum of a one-month time frame, and to send information on complaints electronically to National Bank every month.
These particulars can alter the way that a serious license applicant approaches licensing.
Instead of thinking of an Georgian VASP application as a set of forms needed to receive permission imagine it as a design for an regulated business.
The structure of the business, the service model technology, structure, AML controls, regulatory capital, risk procedures, and customer processes need to be able to work together.
Georgia continues to provide opportunities for fintech and crypto businesses. Additionally, its regulatory framework provides a defined route into the market. However, asking about the speed at which you can apply for an authorization isn’t necessarily the best way to begin.
It’s explaining, in precise terms, what your company’s crypto operations will do and demonstrating that your company is able to carry out the work within the Georgian legal framework.
