It’s not clear enough to describe a regulation application as “We’re launching our cryptocurrency platform”.
Can users exchange crypto to fiat currency? Will the platform be able to transfer virtual assets? Will the company be in control of client wallets or keys? Are they managing a lending platform for digital assets that issues tokens or managing a trading platform?
These differences are essential when applying for a crypto-license within Georgia since the products and services a business plans to provide will affect its regulatory requirements, documentation, control, and capital requirements.
Georgia offers a market that is regulated for virtual assets, which is appealing to fintech companies. However, entering this market takes more effort than just registering your business and launching your website.
First, you need to define the service.
Companies that offer virtual asset services to third party as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This includes the transfer of virtual assets, exchange, management of trading platforms, as well as the administration or custody of cryptocurrency. The information on regulation states that the custody concept extends to the management of the client’s private keys or wallet.
The technical structure of the crypto product is relevant to its position in terms of regulation.
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 deposit funds? Who controls the account? Can assets be exchanged or transferred? Which entity is authorized to authorize transactions?
It is important to know what the business is actually going to be doing.
The business plan you create must outline the real-world business
VASP applications also require more than just a gorgeous pitch deck.
Based on the information provided The National Bank expects a detailed business plan, which includes projections of financials of at least 3 years, including revenue, expenses, and growth forecasts. The plan should also show the genuine intent to operate in Georgia.
This is a problem which must be addressed quickly.
A business plan written to be used by investors will answer the following questions: How quickly will the company expand? The business plan that is regulated must also describe how the operation will operate responsibly.
Companies looking to obtain a vasp licence Georgia applicants should be prepared to connect the commercial model with the compliance model instead of considering them separate documents.
AML cannot be added to the end
Anti-Money Laundering and Counter-Terrorism Controls for financing are one of the major components of the plan described by PB Services.
The supplied material specifically warns that just import of an AML policy from another country is insufficient because Georgian requirements need to be integrated into the firm’s framework.
Additionally, the operational systems are vital. The business plan needs to prove that the company’s system is able to identify potentially suspicious and related transactions.
Practically speaking, the conformity of a product must influence its development prior to being launched. By creating a platform, then deciding the way AML will work and how it will work, you could cause inefficient delays and have to redesign.
Capital Depends on the Services You Select
The necessity of establishing the business model in time is due to regulatory capital.
As per the thresholds listed in the documents, kiosks and exchange activities require 150 000 GEL. Trading platform administration is required to be 350,000 GEL and other covered services require 250,000 GEL. If there are multiple services offered, the threshold that is the highest is used.
This is different from normal operating capital or capital invested. Proof that the required amount is actually funded should accompany the request. Likewise, the capital must be maintained during the entire operation.
Anyone who wants to get a cryptocurrency blockchain certification in Georgia must therefore consider the possibility of regulatory capital in financial planning not after the rest of the application has already been assembled.
Registration isn’t the only aspect of the compliance process.
The compliance calendar doesn’t disappear after approval. The required requirements outline continuing obligations in risk management and cybersecurity technology resilience and risk of fraud as well as retention of records, independent review and complaints from customers.
For example an independent auditor’s view on the risk management framework should be obtained within 12 months after registration. Businesses must also follow the described rules regarding handling complaints. They must accept complaints, regardless of whether they’re written, verbal or electronic, and to examine the complaints within a maximum of one month period, and to provide information on complaints electronically to National Bank every month.
These aspects affect the way serious applicants should take the licensing process.
Imagine the Georgian VASP Application as the style of a legally regulated business.
It is essential that the structure of the company as well as the technology used, AML controls and regulatory capital, in addition to customer processes, are in harmony.
Georgia is continuing to provide opportunities for crypto and fintech businesses, and its regulation framework gives businesses a clearly defined route into the market. However, asking about the speed at which you can receive an approval isn’t the best approach to begin.
It is essential to describe in detail what your crypto-business will do and show that you are prepared to comply with Georgia’s regulations.