It’s not accurate enough to describe a legal application as “We’re launching our crypto platform”.
Can users exchange crypto to fiat currency? Can the platform be used to move virtual assets? Do they have access to client wallets and private keys? Is it administering an exchange platform, crediting against digital assets, or intending to issue tokens?
These distinctions are crucial when obtaining a cryptocurrency license to operate in Georgia. The kind of services an organization plans to offer influences its preparation for regulatory documents control, documents, and capital requirements.
Georgia may offer an attractive business environment for fintech companies however, entering the virtual-asset marketplace now requires more than just registering a business and creating a website.
The definition of the nature of service
In the framework outlined by PB Services, businesses providing covered virtual asset services to third parties must register as virtual asset service providers with National Bank of Georgia.
The scope covers activities such as virtual-asset exchange and transfer, trading-platform administration and custody of cryptocurrency management. The regulatory information provided states that the custody concept stretches to the management of a client’s private keys or wallet.
The technical structure of the crypto product is crucial to its status with respect to regulation.
An entrepreneur who is interested in getting cryptocurrency licenses in Georgia must therefore sketch out the desired customer journey prior to creating the application. What happens when a client deposits money? Who is in charge of your account? Can assets be exchanged or transferred? Which party authorizes the transaction?
The clarity of the answers can help to establish what the firm will do.
Your Business Plan Needs to be able to describe a real-world business
VASP applications need more than an attractive pitch deck.
According to the information provided by the National Bank requires a detailed plan of business that contains financial projections for a minimum period of three years. They include the amount of revenue, expenses, and growth projections. The plan should also show 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 that is written for investors can answer questions like: How quickly can the business grow? A regulation-based business plan should include a description of how the operation is to be run in a responsible manner.
For businesses seeking a vasp license Georgia applicants must be able to link the commercial model with the compliance model, rather than thinking of them as separate documents.
AML is not able to be added at the very end
PB Services describes the preparation as a sequence of steps which include anti-money laundering and control of financing for terrorism.
The document warns that importing an AML Policy from another jurisdiction is not enough since Georgian laws must be included into a company’s framework.
Also, the operational systems are important. The business plan should show that the system is able to identify potentially suspicious and related transactions.
Practically, the quality of a product should influence its development prior to being launched. By building a platform and then deciding how AML will work it can lead to unnecessary delays and redesign.
The Services You Select Can affect your capital
Regulatory capital is another reason to determine the business model before.
In accordance with the thresholds specified in the sources, kiosks and exchange activities require 150 000 GEL. Management of a trading platform for trading requires 350,000 GEL and other covered services need 250,000 GEL. If multiple services are offered, the highest applicable threshold is the one to be used.
It’s not the same as operating capital that is used for normal purposes. Evidence that the required amount is actually paid for must accompany the request. Likewise, the capital should be kept throughout the duration of operation.
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 the only aspect of compliance work
The compliance calendar cannot disappear at the moment of approval. The requirements listed in the document outline continuing obligations in risk management and cybersecurity security, technology resilience, fraud risk and the retention of records, independent reviews and complaints from customers.
For instance, an independent auditor’s opinion on the risk management framework should be sought within 12 months from the time of registration. The guidelines for handling complaints oblige businesses to take complaints in written, oral or electronically and to analyze them within a maximum of a month, and provide information about complaints electronically to the National Bank each month.
These details can change the way in which a serious applicant is approached when it comes to licensing.
Instead of thinking of the Georgian VASP application as a collection of forms required for obtaining permission imagine it as the structure of an authorized business.
A company’s structure, service model, and technological capabilities, AML controls as well processes for regulating capital, risk and customer-facing processes should be consistent.
Georgia provides opportunities for businesses in the field of fintech and crypto and the regulatory framework provides an open path to entering the market. But the strongest starting point isn’t asking how quickly a license can be obtained.
It’s about being able to describe clearly what your crypto business will accomplish and showing that the business is ready to do it within Georgia’s legal framework.
