It’s not accurate enough to describe a legal application as “We’re the first to launch our crypto platform”.
Can customers trade cryptocurrency to fiat? Does the platform permit the transfer of virtual assets? Does the company control over client wallets and private keys? Are they administering an online asset lending platform in the process of distributing tokens or managing a trading system?
Those differences matter when pursuing an crypto license in Georgia due to the services that a company intends to provide will impact its preparation for regulatory compliance documents, controls, as well as capital requirements.
Georgia is a fantastic location for fintech companies, but getting into its highly-regulated virtual asset market is more than just registering a company and creating a site.
First, Define the Service
Businesses offering virtual asset services to third-party clients as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Within the scope are the activities of virtual transfer and exchange of assets along with trading platform administration and the management of crypto assets or custody. According to the regulations provided the concept of custody includes management of a client’s personal key and wallet.
That makes the technical design of a crypto-product pertinent to its legal status.
Before submitting an application for a license, a founder who is interested in obtaining an e-currency license in Georgia must map out the customer journey. What happens after the client makes a deposit of their funds? Who is in charge of your account? Can assets be exchanged for or transferred? Who is the person who approves the transaction?
Clare answers can help define what the business is actually going to be doing.
Your Business Plan Has to Describe a Real Business
VASP applications also require more than a beautiful pitch deck.
The National Bank will expect a thorough business plan with financial projections over minimum three years. The plan should contain revenue, expenses and growth expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
This is a need that must be addressed quickly.
Investors can ask questions like how quickly the business will expand. A business plan for an operation that is regulated must contain information about how it will be run with care.
Companies seeking a vasp Georgia license should be prepared to connect to the commercial model as well as the compliance model, instead of treating the documents as distinct documents.
AML cannot be added at the end
PB Services has described the preparation process as an important element of the measures to prevent money laundering and terrorist financing.
The document specifically warns against importing policies on AML from a different state, since Georgian laws must be incorporated into the framework of a company.
The operational systems are crucial. The business plan should show that the system used by the firm can identify related or potentially suspicious transactions.
In the real world it is essential that compliance be a factor in the product’s development prior to its launch. It isn’t a good idea to develop a platform without deciding how AML policies will be implemented. This could lead to unnecessary redesigns and delays.
Capital Depends on the Services You Select
Knowing the business model as early as is possible is important for a number of reasons, including regulatory capital.
As per the thresholds set out in the source material Exchange and transfer activities which include kiosks, are required to be 150,000 GEL. Administration of trading platforms requires 350,000 GEL and other services need 250,000 GEL. When several services are provided the most appropriate threshold governs.
This is distinct from normal capital used for investment or operational purposes. The evidence that the amount is actually financed is required with the application and the capital needs to be maintained throughout operations.
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 isn’t enough to complete the Compliance Work
The compliance calendar doesn’t disappear after approval. The guidelines outline the ongoing obligations for risk management and cybersecurity as well as technology resilience fraud risk and the retention of records, independent reviews and complaints from customers.
A risk-management framework, for example, will require an opinion from an independent auditor within a months from the date of registration. The guidelines for handling complaints require companies to accept complaints in oral, written or electronically and evaluate them within a time limit of a month, and submit complaint statistics electronically to the National Bank each month.
Those details change how an experienced applicant approaches licensing.
Imagine a Georgian VASP Application as the design of an regulated business.
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 perfect alignment.
Georgia remains a wonderful place to start fintech and crypto businesses. The regulatory framework it has provides an easily-defined route to the market. But the most effective starting point isn’t determining how quickly an approval can be obtained.
It’s the ability, in specific terms, to describe what your crypto business is planning to do and prove that your company will be doing it in accordance with Georgia’s legal framework.