It’s not accurate enough to describe a regulation application as “We’re the first to launch our crypto platform”.
Can customers trade cryptocurrency to fiat? Can the platform transfer virtual assets? Can the company manage client wallets or private keys? Is it managing the trading platform or lending against digital assets or planning to issue tokens?
These distinctions are crucial when applying for a crypto-license within Georgia as the type of services a company plans to provide will affect its legal requirements such as documentation, control and capital requirements.
Georgia may offer an attractive environment for fintech businesses but to enter its virtual-asset market now requires much more than just registering a business and creating a web site.
First, let’s define the service.
According to the guidelines set forth by PB Services, businesses providing covered virtual asset services to third parties are required to register as virtual asset service providers (ASP) with the National Bank of Georgia.
Included in the scope are actions like virtual asset exchange and transfer and trading platform administration and custody management for cryptocurrency. In addition, as per the information provided by the regulator the concept of custody includes administration of the customer’s private keys and wallet.
The design and technical aspects of the crypto product is important to its place as a result of regulations.
A business owner who would like to get an crypto license in Georgia should map out the proposed customer journey before preparing the application. What happens after a customer deposit funds? Who owns the wallet? Can assets be traded or transferred? Who can authorise transactions?
A clear understanding of the answers is helpful to clarify what the company is actually doing.
Your Business Plan Should Describe a Real Company
VASP applications require more than just an attractive pitch deck.
The National Bank will expect a thorough business plan with projections of financials for at least three years. This must include revenues, expenses and growth assumptions. The plan must also reflect that there is a real intention to run in Georgia.
It is important to address this issue as quickly as you can.
A business plan written for investors will answer concerns like how quickly the company’s growth rate can be accelerated. The business plan of the regulatory process must contain information about how the operation will be conducted with care.
Georgian applicants seeking a vasp license should not view the commercial model as if they were not connected. Instead they should link them.
AML is not able to be added at the very end
PB Services has described the preparation process as a key component of which is the measures to prevent money laundering and terrorist financing.
The document warns that the importation of an AML policy from another country will not suffice because Georgian regulations must be integrated into the company’s structure.
Additionally, the operational systems are important. Business plans should prove that the system used by the company can detect suspicious transactions.
In the real world it is essential that compliance be a factor in the design of a product prior to launch. It isn’t a good idea to build a platform before deciding how AML policies will be applied. This could lead to unneeded redesigns and delays.
Capital is dependent on the Services you Choose
Capital for regulatory purposes is another reason to determine the business model early.
Under the thresholds provided in the document, exchange and transfer activities such as kiosks, need 150,000 GEL. Administration of the trading platform needs 350,000 GEL while other covered services need 250,000 GEL. If multiple services are provided the threshold which is most affluent applies.
It’s not the same as ordinary operating capital. The application must be accompanied by proof of the amount requested is financed.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration Doesn’t Finish the Compliance Work
Approval isn’t the moment where the compliance calendar ceases to exist. The requirements provided outline continuous obligations pertaining to risk management, cybersecurity technological resilience fraud risk, recording retention, independent review and complaints from customers.
To get an independent audit opinion regarding the framework for risk management A company must sign up within twelve months. In accordance with the regulations, businesses must accept complaints either in writing or in oral form and review them within one month. They must also submit statistics on complaints to the National Bank electronically each month.
The details of these changes affect how an applicant who is serious should approach licensing.
Instead of thinking of the Georgian VASP application as a collection of forms required for obtaining permission imagine it as the style of an regulated business.
It is important that the organization’s structure and technology, AML controls and regulatory capital, as well as the customer’s processes are in harmony.
Georgia has opportunities for crypto and fintech companies, and the regulatory framework is an easy way to enter the market. However, the best starting point isn’t about how fast it is possible to obtain a license.
It’s about being able to describe, in precise terms, what your crypto business will accomplish and showing that your business is prepared to do it within Georgia’s legal framework.