“We’re launching a crypto platform” isn’t the most precise description of a regulatory app.
Customers can convert cryptocurrency to fiat? Can the platform allow virtual assets to be transferred? The company will be able to control clients’ wallets and private keys? Are they managing a digital asset lending platform in the process of distributing tokens or managing a trading platform?
The distinctions are significant when it comes to obtaining cryptocurrency licenses in Georgia because the services the company plans to offer will impact its preparation for regulatory compliance and documentation, controls and capital requirements.
Georgia might be an appealing location for fintech firms, but entering its regulated virtual-asset market now requires much more than simply registering a firm and launching a website.
Definition of the scope of service
Businesses offering virtual asset services to third party within the framework outlined in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This covers virtual asset transfer and exchange, the administration of trading platforms, as well as the administration or custody of cryptocurrency. The regulations state that the concept of custody extends to the management of a client’s private keys, or wallet.
That makes the technical design of a crypto-product relevant to its regulatory position.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when the customer deposits their assets? Who controls the account? Can assets be exchanged for or transferred? Which party authorizes the transactions?
It is important to know what the company will actually be doing.
Your Business Plan Needs to Describe a Real Company
VASP applications need more than just a visually appealing pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections that last at least three years. This must include income, expenses and growth assumptions. The plan should also show an actual intention to do business in Georgia.
This is an issue that needs to be addressed in the earliest possible time.
A business plan written for investors answers questions about how quickly the company will grow. The plan of business for regulation should also describe how the operation will operate responsibly.
Companies that are seeking vasp Georgia license must be prepared to join both the commercial model and compliance model instead of thinking of the two as separate documents.
AML Does not qualify for inclusion in the End
PB Services describes the preparation as a sequence of steps that include anti-money laundering and counter-terrorism controls.
The material warns specifically that importing an AML Policy from a different jurisdiction will not be enough as Georgian rules must be incorporated into the framework of a company.
The operational systems are vital. The business plan needs to demonstrate that the company’s systems can identify related and potentially suspicious transactions at the very beginning.
In practical terms the compliance process should influence the design of a product prior to launch. Making a platform first, and considering what AML procedures will fit afterward can create unnecessary redesign and cause delays.
Capital is Dependent on the Services you select
The need to develop an early business plan is a result of the capital required by the regulatory authorities.
Based on the thresholds set in the sources, kiosks and exchange activities are required to be 150 000 GEL. Management of trading platforms requires 350,000 GEL whereas other covered services are only required to be 250,000 GEL. If there are multiple services offered, the threshold that is most applicable is the one that is.
This is different from regular capital for investment or operating. Proof that the required amount is actually funded must accompany the request, and the capital should be kept throughout operation.
The person who is aspiring to obtain a crypto-blockchain permit in Georgia should therefore take into consideration the capital required by Georgia’s regulatory authorities when calculating his financial plan and not wait until all the other work has been completed.
Registration isn’t the end of compliance work
The calendar of compliance doesn’t end when you have approval. The supplied requirements describe the ongoing obligations in cybersecurity, risk management, technological resilience, fraud risk, recording retention, independent review and customer complaints.
A framework for risk management such as a risk management framework, for instance, is required to receive an opinion from an independent auditor within 12 months after registration. According to the rules, companies are required to take complaints in writing or in oral form and review them within one month. They are also required to transmit statistics about complaints to the National Bank electronically each month.
These particulars can alter the way an experienced license applicant approaches licensing.
Imagine the Georgian VASP Application as the look of a controlled business.
It is crucial that the structure of the company and technology, AML controls and regulatory capital, in addition to customer processes, are in perfect alignment.
Georgia offers opportunities to crypto and fintech companies, and the legal framework provides an open path to entering the market. However, asking about the speed at which you can apply for an authorization isn’t necessarily the most effective way to start.
You must be able define in detail the goals of your crypto-business will do, and demonstrate that you are prepared to abide by Georgia’s laws.