“We’re creating a crypto platform” isn’t the most precise description of a regulatory app.
Are customers able to exchange crypto in exchange for fiat currency? Does the platform transfer virtual assets? The company will be in charge of client wallets or keys? Is it managing an online trading platform, lending against digital assets, or is it planning to issue tokens?
These differences are important when applying for an crypto-license in Georgia as the type of products and services a business plans to provide will affect its legal requirements, documentation, control, and capital requirements.
Georgia is an ideal place to start fintech businesses, however to enter its regulated virtual asset market requires more than registering a business and building a website.
First, let’s define the service.
Companies that offer virtual asset services to third party under the framework described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This covers virtual asset transfer and exchange, management of trading platforms, as well as custody or management of cryptocurrency. The regulations state that the custody concept extends to the management of a client’s private keys, or wallet.
That makes the technical design of a product in the crypto space pertinent to its legal status.
Before submitting an application for a license for a business founder looking to obtain an e-currency license for Georgia should map out the customer journey. What happens when the customer deposit their money? Who manages the account? Are assets traded or transferred? Who is the one who authorizes a transaction?
The answers that are precise and clear can help decide what the company will be doing.
Your business plan must describe a real business
VASP applications require more than just a visually appealing pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections over minimum three years. It should include the growth, expense and revenue projections. The plan must also demonstrate that there is a real intention to run in Georgia.
It is crucial to tackle this issue as soon as you can.
A business plan that is written for investors will address questions like: How quickly can the company grow? A regulatory business plan must be able to explain how the business will function responsibly.
For companies seeking a vasp license Georgia applicants should be prepared to connect the commercial model with the compliance model rather than treating them as unrelated documents.
AML is not possible to add at the very end
PB Services has described the preparation process as a key part of it is the measures to prevent terrorist financing and money laundering.
The supplied material specifically warns that simply importing an AML policy from another jurisdiction is insufficient because Georgian laws must be integrated into the company’s framework.
The operational systems play a role too. The business plan should show that the system is able to identify possible suspicious transactions and the associated activities.
It is essential to consider compliance as an aspect of product development. When you build a platform, and then deciding on how AML can be implemented in the future, you risk causing unnecessary delays and even redesign.
Capital is contingent on the Services You Select
Another reason is regulatory capital. to establish the business model in advance.
In accordance with the thresholds set forth in the source materials for transfers and exchanges, including kiosks, they must have at minimum 150,000 GEL. Management of trading platforms requires 350,000 GEL while other covered services need only 250,000 GEL. If multiple services are provided, the threshold that is highest applies.
This is separate from ordinary capital used for investment or operational purposes. Proof that the required amount is actually funded should accompany the request. Likewise, the capital has to be maintained throughout the duration of operation.
A business owner who intends to apply for a crypto-blockchain license in Georgia needs to consider regulatory capital at the time of financial planning, and not until the rest of the application has been submitted.
Registration is not the end of the compliance process.
The compliance calendar doesn’t disappear after approval. The requirements listed in the document outline ongoing obligations in risk management and cybersecurity, technology resilience, fraud risk as well as the retention of records, independent reviews and complaints from customers.
To obtain an independent audit opinion regarding the risk management framework, a company must register within twelve months. The business must also comply with the guidelines described in handling complaints. They must accept complaints, whether they are written, oral or electronically, and review them within a one-month time frame, and to send information on complaints electronically to National Bank every month.
These factors can affect the way that a serious license applicant approach licensing.
Imagine a Georgian VASP Application to represent the layout of a controlled business.
The company structure, service model technology, structure, AML controls, regulatory capital, risk procedures, and processes for customers must all connect.
Georgia is a fantastic location for crypto and fintech businesses. Its regulatory framework offers an easy path to market. However, asking when you can receive an authorization isn’t necessarily the best approach to begin.
It’s describing, in precise terms, what your company’s crypto operations will perform and showing that your business is prepared to conduct it within Georgia’s regulatory framework.
