“We’re in the process of launching a crypto-based platform” isn’t a clear enough description of a regulation application.
Can customers convert cryptocurrency to fiat? Can the platform be used to transfer virtual assets? The company will have control over the wallets of clients as well as private keys? Do they plan to manage a trading platform or lend against digital assets?
These distinctions are critical when applying for the crypto-license in Georgia due to the services a company is planning to provide will affect its regulatory requirements, documentation, control, and capital requirements.
Georgia offers a regulated market for virtual assets that is attractive to fintech firms. However, entering the market requires much more effort than simply registering your company and launching your website.
The definition of the nature of service
Businesses that provide virtual asset services to third parties within the framework outlined in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This includes transfer of virtual assets and exchange, the administration of trading platforms, as well as custody or management of cryptocurrency. Importantly, the supplied regulatory information says the custody concept extends to managing a client’s private keys or wallet.
This makes the design of cryptocurrency-related products relevant to their legal status.
Before submitting a license application an entrepreneur who is interested in obtaining an e-currency license for Georgia should map out the customer’s journey. What happens when a customer deposits funds? Who owns your wallet? Can assets be transferred or exchanged? Who can approve transactions?
A clear understanding of the answers is helpful to understand what the firm is actually doing.
Your Business Plan must describe an actual company
VASP applications need more than just an appealing pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections for minimum three years. This must include the growth, expense and revenue estimates. The plan must also indicate a genuine intention to operate in Georgia.
It is crucial to tackle this issue as soon as you can.
Investors can inquire about how quickly the business will expand. A business plan for any regulatory activity must include information on how it will be run safely.
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 cannot be added at the end
PB Services has described the procedure of preparation as a significant component of which is the measures to prevent the financing of terrorists and money laundering.
The information warns explicitly that the importation of an AML policy from another country won’t suffice since Georgian regulations must be integrated into a business’s framework.
The operational systems matter too. The business plan needs to show that the system can identify potentially suspicious and related transactions.
It is essential to consider compliance as a factor in product development. When you build a platform, and then deciding the way AML works, you can cause inefficient delays and have to redesign.
Capital Depends on the Services You Choose
Capital for regulatory purposes is another reason to define the business model before.
As per the thresholds listed in the documents, kiosks and exchange activities require 150 000 GEL. The administration of platforms for trading needs 350,000 GEL, while other covered services require 250,000 GEL. When several services are provided the most appropriate threshold governs.
This is separate from ordinary capital for investment or operating. Evidence that the required amount is actually financed must accompany the request. Likewise, the capital should be kept throughout operation.
An entrepreneur who plans to submit an application for a crypto blockchain license in Georgia should consider regulatory capital prior to the start of financial planning, not until the rest of the application has been submitted.
Registration doesn’t finish the formalization process.
The compliance calendar doesn’t disappear at the moment of approval. The requirements listed in the document outline ongoing obligations in risk management and cybersecurity, technology resilience, fraud risk and record retention, independent review and complaints from customers.
A risk-management system, for example, must receive an opinion from an independent auditor within one months from the date of registration. The rules state that businesses must accept complaints either in writing or in oral form and review them within one month. They are also required to provide a report of complaints to the National Bank electronically each month.
The details of these changes affect how an applicant who is serious should approach licensing.
Instead of thinking of the Georgian VASP application as a collection of forms that must be completed to get permission consider it as the design of an regulated business.
The structure of the company, its service model, technology, AML controls, capital regulations, risk procedures, and customer processes need to integrate.
Georgia offers opportunities to crypto and fintech companies, and the legal framework provides an open path to entering the market. The best place to begin is not by asking what speed a license is going to be issued.
It’s being able to explain in clear terms what your crypto business will perform and showing that the company is prepared to carry out the work within the Georgian legal framework.