It’s not precise enough to define a regulatory application as “We’re launching our crypto platform”.
Customers can exchange crypto for fiat currencies? The platform will be able to transfer virtual assets? The company will be in charge of client wallets or keys? Do they manage a lending platform for digital assets in the process of distributing tokens or managing 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 an ideal place for fintech firms, but to enter its regulated virtual asset market is more than just registering your business and creating a website.
First, you need to define the service.
In the framework outlined by PB Services, businesses providing covered virtual-asset service to third parties need to be registered as Virtual Asset Service Providers with National Bank of Georgia.
The scope encompasses activities including virtual-asset exchange, transfer, platform administration for trading and custody or management. The regulatory information provided states that the concept of custody extends to the administration of the clients’ private keys or wallet.
This makes the design of a crypto-product pertinent to its legal status.
Before submitting an application for a license the founder interested in obtaining an e-currency license in Georgia must outline the customer journey. What happens after a user deposit funds? Who owns your wallet? Are assets able to be exchanged or transferred? Who is the person who authorizes a transaction?
The answers are clear and help determine the exact nature of what the business will be doing.
Your Business Plan must describe an actual company
A VASP application also requires more than an attractive pitch deck.
The National Bank will expect a complete business plan that contains financial projections that last minimum three years. This must include the growth, expense and revenue estimates. The plan must also demonstrate the genuine intention to conduct business in Georgia.
This is a need that deserves to be addressed as soon as possible.
Investors are able to ask questions about how fast the company will grow. The plan of business for regulation should explain how the business will operate responsibly.
Companies looking to obtain a vasp licence Georgia applicants should be prepared to connect the commercial model with the compliance model rather than thinking of them as separate documents.
AML cannot be added at the end
PB Services describes the preparation as a series of steps that includes anti-money laundering as well as counter-terrorism financing controls.
The warnings are specific to the importation of an AML Policy from another jurisdiction will not be enough as Georgian rules must be incorporated into a business’s framework.
The operational systems matter as well. The business plan needs to demonstrate that the company’s system can spot related and suspicious transactions at the very beginning.
Practically speaking the compliance process should influence the product’s development prior to its launch. It isn’t a good idea to design a platform before deciding how AML policies are to be implemented. This could lead to unnecessary redesigns and delays.
The Services You Select Can Have an impact on your Capital
Establishing the business’s model as early as is possible is important for a number of reasons, such as regulatory capital.
In accordance with the thresholds specified in the source materials, kiosks and exchange activities require 150 000 GEL. Trading platform administration is required to be 350,000 GEL in addition to other covered services need 250,000 GEL. If there are multiple services offered the threshold that’s most applicable is the one that is.
It’s not the exact same as ordinary operating capital. The application should be accompanied by proof of the requested amount has been funded.
Anyone who wants to get a the crypto blockchain license in Georgia should therefore think about the possibility of regulatory capital in financial planning not before the rest of the application is assembled.
Registration isn’t the end of the compliance process.
The compliance calendar does not end with approval. The requirements listed in the document outline ongoing obligations in risk management and cybersecurity as well as technology resilience and risk of fraud and records retention, independent review and complaints from customers.
For instance, an independent auditor’s opinion on the risk management framework should be obtained within 12 months of registration. Businesses also must follow the guidelines to handle complaints. They must accept all complaints, whether they are written, oral or electronically, and review the complaints within a maximum of one month period, and also to submit statistics on complaints electronically to National Bank every month.
These aspects affect the way serious applicants should be approached when seeking licensing.
Imagine the Georgian VASP Application as the design of an unregulated business.
It is important that the organization’s structure, technology, AML controls and regulatory capital, along with customer processes, are all in sync.
Georgia offers opportunities to firms in fintech and crypto, and the regulatory framework provides a clear path into the market. However, the best starting point isn’t about how fast a license can be obtained.
It’s explaining precisely what your company’s crypto operations will be doing and proving that your company is able to do it within the Georgian legal framework.