The application for regulatory approval should not contain the words “We are setting up a platform for cryptocurrency”.
Are customers able to convert cryptocurrency into fiat? Will the platform be able to move virtual assets? The company will be able to control clients’ wallets or private keys? Are they managing a lending platform for digital assets and issuing tokens, or overseeing a trading system?
These differences are important when seeking cryptocurrency licenses in Georgia because the services a company is planning to provide influence its regulatory preparation, documentation, controls, as well as capital requirements.
Georgia is a great place for fintech companies, but getting into its highly-regulated virtual asset market is more than just registering your business and creating a website.
Defining the nature of service
Under the framework described by PB Services, businesses providing covered services in the field of virtual assets for third parties must register as virtual asset service providers with National Bank of Georgia.
The scope covers activities including virtual-asset exchange, transfer, trading-platform administration and custody of cryptocurrency management. The regulatory information provided states that the custody concept extends to the management of a client’s private keys or wallet.
The technical specifications of the cryptocurrency product is crucial to its status in terms of regulation.
Anyone who wants to obtain an crypto license in Georgia should thus map out the desired customer journey prior to creating the application. What happens when a customer deposits assets? Who manages the wallet? Can assets be exchanged, or transferred? Which party is authorized to authorise transactions?
Clare answers can help define what the business is actually going to be doing.
Your business plan should describe an actual business
A VASP application also requires more than a beautiful pitch deck.
Based on the information provided, the National Bank requires a detailed plan of business with financial projections for a minimum period of three years. They include the amount of revenue, expenses, and growth projections. The plan must also prove an actual intention to be operational within Georgia.
This is a requirement that needs to be considered early.
A business plan written for investors answers concerns like how quickly the company can grow. A regulatory business plan must include a description of how the operation will operate in a safe manner.
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 to the End
The Anti-Money Laundering as well as the Counter-Terrorism Controls for financing are among the most important components of the procedure described by PB Services.
The document warns that the import of an AML policy from another country won’t suffice since Georgian regulations must be integrated into a company’s framework.
Furthermore, the operational systems are crucial. The business plan needs to demonstrate that the system of the business can detect similar and suspicious transactions at the very beginning.
In practical terms the compliance process should influence the product’s development prior to its launch. By creating a platform, then determining how AML will function in the future, you risk causing delay and unnecessary changes.
The services you choose to use can Have an impact on your Capital
Determining the business model in the earliest possible time is vital for a variety of reasons, not least the need for regulatory capital.
As per the criteria set out in the source material, transfer and exchange, as well as kiosks have to be at least 150,000 GEL. Trading platform administration is required to be 350,000 GEL While other covered services require 250,000 GEL. When multiple services are provided the threshold that is the most applicable is the one to be used.
It’s not the exact same as ordinary operating capital. Evidence that the required amount was actually paid for must accompany the application, and the capital needs to be kept in place throughout the operation.
The person who is aspiring to apply for a crypto-blockchain licence in Georgia must take into account the capital required by Georgia’s regulatory authorities when planning his finances before the other aspects have been taken care of.
Registration is not the end of compliance work
The compliance calendar doesn’t end with approval. The guidelines outline ongoing obligations in risk management and cybersecurity, technology resilience fraud risk as well as the retention of records, independent reviews and customer complaints.
A risk management framework For instance, a risk-management framework is required to receive an opinion by an independent auditor within the 12 months of its registration. The rules state that businesses are required to accept complaints in oral or written form and review them within one month. Additionally, they must submit statistics on complaints to the National Bank electronically each month.
These details affect how a serious applicant should approach licensing.
Instead of thinking of an Georgian VASP application as a collection of forms needed to receive permission imagine it as the design of a regulated business.
The structure of a company’s business, its service model, and technology, AML controls as well regulatory capital, risk procedures and customer processes must all be consistent.
Georgia provides opportunities for firms in fintech and crypto, and the legal framework gives an easy way to enter the market. The best way to begin is not to ask what speed a license is going to be granted.
It’s describing clearly what your crypto business will perform and showing that your business is prepared to do it within the Georgian legal framework.