“We’re launching a crypto platform” isn’t a precise enough description for a regulatory application.
Customers can exchange cryptocurrency in exchange for fiat? Can the platform allow virtual assets to be transferred? Is the company in control of client wallets or keys? Will it manage the trading platform or lend against digital assets?
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 a great place for fintech firms, but getting into its highly-regulated virtual asset market requires more than simply registering a company and establishing a website.
Definition of the nature of service
Businesses offering virtual asset services to third party according to the model described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Included in the scope are things like virtual transfer and exchange of assets as well as the administration of trading platforms as well as the management of crypto assets or custody. The regulatory information provided states that the custody concept stretches to the management of a client’s private keys, or wallet.
That makes the technical 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’s journey. What happens when a consumer deposit funds? Who owns the account? Can assets be exchanged, or transferred? Who is authorized to authorize transactions?
Clarity in the answers helps to clarify what the company will actually accomplish.
Your Business Plan Must Describe a Real Business
VASP applications need more than a visually attractive pitch deck.
The National Bank will expect a comprehensive business plan that includes projections of financials for at least three years. The plan should contain revenues, expenses and growth assumptions. The plan should also show the genuine intention to do business in Georgia.
This is a requirement that needs to be considered early.
A business model written for investors answers concerns like how quickly the business can expand. A business plan for the regulatory process must include information on how the operation will be conducted in a responsible manner.
Companies seeking a vasp Georgia license must be prepared to link both the commercial model and compliance model, instead of treating them as separate 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 material provided specifically warns that just taking an AML policy from a different jurisdiction is not sufficient since Georgian requirements need to be integrated into the company’s framework.
The operational systems matter also. The business plan should demonstrate that the systems of the company is able to detect any suspicious transactions or those that may be related to them.
Practically speaking, the conformity of a product has to influence its design before it’s launched. First, establishing a platform and considering how AML procedures fit in the future could result in unnecessary rework and cause delays.
The Services You Choose Can affect your capital
The need to establish an early business plan is also due to capital required by the regulatory authorities.
In accordance with the criteria set out in the source material, transfers and exchanges, including kiosks have to be at least 150,000 GEL. Management of platforms for trading needs 350,000 GEL whereas other covered services require only 250,000 GEL. If multiple services are offered the most relevant threshold governs.
It’s not as simple as operating capital that is used for normal purposes. The evidence that the amount is actually financed is required with the application and the capital needs to be kept in place throughout the operation.
The founder that wants to obtain a crypto-blockchain permit in Georgia should therefore take into consideration the capital required by Georgia’s regulatory authorities in his budgeting process, not after all the other work has been completed.
Registration isn’t the end of compliance work
The compliance calendar cannot disappear when the calendar is approved. approval. The provided requirements outline regular obligations that involve cybersecurity, risk management, technological resilience, fraud risk, recording retention, independent review and complaints from customers.
To obtain an audit-free opinion from an independent source on the risk management framework the company must be registered within 12 months. The rules state that businesses are required to accept complaints written or verbally and examine them within a month. They also have to provide a report of complaints to the National Bank electronically each month.
These aspects can alter the way a serious license applicant approach licensing.
Instead of thinking of a Georgian VASP application as a set of documents that must be completed to get permission imagine it as the design of an authorized business.
The structure of a company’s business, its service model, and technology, AML controls as well the risk management procedures, regulatory capital and customer-facing processes should be in sync.
Georgia is a great place to start crypto and fintech companies, and the legal framework provides a clear path into the market. The best place to start is not by asking the speed at which a license could be issued.
It’s the ability, specifically, to describe what your crypto business is planning to do and show that your business will be doing it within Georgia’s legal framework.