“We’re going to launch a cryptocurrency platform” isn’t an accurate enough description of a regulatory app.
Customers can convert cryptocurrency to fiat? Will the platform transfer virtual assets? Does the company control over wallets for clients and private keys? Does it plan to administer a 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 an ideal location for fintech companies, but to be able to access its controlled virtual asset market takes more than registering a business and creating a website.
First, Define the Service
Under the framework described by PB Services, businesses providing covered virtual asset services to third parties need to be registered as virtual asset service providers with the National Bank of Georgia.
In the scope of this are things like virtual transfer and exchange of assets along with managing trading platforms and cryptocurrency management or custody. Importantly, the supplied regulation states that the concept of custody also applies to the management of a user’s private account or key.
The design and technical aspects of the product in question is pertinent to its place in terms of regulation.
An entrepreneur who is interested in getting cryptocurrency licenses in Georgia should therefore map the desired customer journey prior to making the application. What happens after the client transfers their money? Who owns the wallet? Are assets able to be traded or transferred? Which entity is authorized to authorize the transactions?
The answers are clear and help determine what the business is actually going to be doing.
Your Business Plan Needs to Describe the real business
VASP applications also require more than a beautiful pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections for minimum three years. This should include revenue, expenses and growth expectations. The plan must also demonstrate an actual intention to operate in Georgia.
This is a problem that needs to be addressed early.
Investors may ask questions such as how fast the business will expand. A regulation-based business plan should provide a clear explanation of how the company will function responsibly.
Companies that are seeking vasp Georgia license should be prepared to link to the commercial model as well as the compliance model, rather than treating them as distinct documents.
AML can’t be added at the End
PB Services describes the preparation as a series of steps that include anti-money laundering and counter-terrorism controls.
The material provided specifically warns that simply importing an AML policy from another jurisdiction isn’t enough because Georgian laws must be integrated into the firm’s framework.
It is also important to look at the operational systems. The business plan should show that the system is able to identify possible suspicious transactions and the associated activities.
Practically, the compliance of a product has to influence its design before it’s released. It is not recommended to build a platform before making a decision on how AML policies will be applied. This can lead to unnecessary redesigns and delays.
The Services You Select Can Have an impact on your Capital
Regulatory capital is another reason to identify the business model before.
According to the thresholds in the source materials, kiosks and exchange activities need 150 000 GEL. Management of a trading platform for trading is required to be 350,000 GEL and other covered services need 250,000 GEL. The most stringent thresholds apply when multiple services are being offered.
This is distinct from normal capital for investment or operating. Evidence that the required amount is actually funded must accompany the request. Additionally, the capital needs to be maintained throughout the duration of operation.
The founder who plans to obtain a an authorization for crypto-blockchain in Georgia must therefore consider regulatory capital as part of financial planning not after the rest of the application is assembled.
Registration isn’t the only aspect of the compliance process.
The calendar of compliance does not expire with the approval. The requirements provided outline regular obligations that involve cybersecurity, risk management, technological resilience and fraud risk, as well as records retention, independent review and complaints from customers.
To get an audit report from an independent auditor on the framework for risk management the company must be registered within twelve months. Businesses must also follow the described rules for handling complaints. They are required to accept all complaints, whether they be oral, written or electronic, and to examine them in a maximum one-month time frame, and to send data on complaints electronically to National Bank every month.
These particulars can alter the way that a serious license applicant takes licensing.
Consider the Georgian VASP as a design for a company, rather than a set of forms that need to be filled out.
A company’s structure, business model and technology, AML controls as well the risk management procedures, regulatory capital and customer procedures must be coherent.
Georgia remains a wonderful place to start fintech and crypto businesses. The framework for regulation provides an easily-defined route to the market. However, asking when you can obtain a license isn’t the best approach to begin.
You must be able to define in detail the goals of your business’s crypto-related activities will be and show that you’re prepared to comply with Georgia’s rules.