It’s not precise enough to define a regulatory application like “We’re launching our cryptocurrency platform”.
Can customers convert cryptocurrency to fiat? Will the platform be able to transfer virtual assets? Will the company have control over the wallets of clients as well as private keys? Do they plan to manage an exchange platform or lend against digital assets?
These differences are essential when applying for an crypto-license in Georgia as the type of products and services a business plans to provide will affect its requirements for regulatory compliance, documentation, control, and capital requirements.
Georgia is an ideal location to start fintech businesses, however getting into its highly-regulated virtual asset market, you need more than just registering a company and establishing a website.
First, Define the Service
In the framework outlined by PB Services, businesses providing covered virtual-asset services for third parties must register as virtual asset service providers (ASP) with the National Bank of Georgia.
Within the scope are things like virtual transfer and exchange of assets along with management of trading platforms and custody or management of cryptocurrency. The regulatory information provided states that the custody concept extends to the administration of client’s private keys, or wallet.
The technical design of a crypto product pertinent to its legal status.
Before submitting a license application an entrepreneur who is looking to obtain an e-currency licence in Georgia must map out the customer journey. What happens when a consumer deposits money? Who is the person who controls the account? Are assets traded or transferred? Which party authorizes the transaction?
Questions that are precise and clear can help decide what the company will be doing.
The business plan you create must outline an actual business
A VASP application also requires more than a beautiful pitch deck.
According to the information supplied according to the information provided, the National Bank requires a detailed plan of operation that includes financial projections covering an minimum of three years. This includes income, expense, as well as growth projections. The plan must also indicate the intention to be operational within Georgia.
This is an issue that needs to be addressed early.
Investors can ask questions like what speed the company will grow. The regulatory business plan should include a description of how the business will run in a responsible 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 at the very end
PB Services describes the preparation as a set of steps which include anti-money laundering and anti-terrorism financing controls.
The provided material specifically warns against simply importing a policy regarding AML from a different country because Georgian laws must be integrated into the structure of the company.
The operational systems matter in the same way. The business plan should demonstrate that the systems of the company can detect suspicious transactions or those that may be related to them.
Practically, the compliance of a product has to influence its development before it is released. Making a platform first, and looking into how AML procedures fit later could lead to unnecessary changes and lead to delays.
Capital is contingent on the Services You Select
The necessity of establishing a business model early is also due to regulatory capital.
In accordance with the thresholds specified in the sources, kiosks and exchange activities need 150 000 GEL. Management of platforms for trading needs 350,000 GEL while other covered services only require 250,000 GEL. If multiple services are provided the threshold which is the highest is used.
This is separate from ordinary capital for investment or operating. A proof that the amount has actually been funded is required with the application and the capital has to be kept in place throughout the operation.
Anyone who wants to get a an authorization for crypto-blockchain in Georgia must therefore consider regulatory capital during financial planning not after the rest of the application has already been put together.
Registration Doesn’t Finish the Compliance Work
Approval is not the point at which the compliance calendar goes away. The provided requirements outline the ongoing obligations in risk management, cybersecurity, technological resilience fraud risk, record retention, independent review and customer complaints.
For example an independent auditor’s report regarding the risk-management system must be obtained within 12 months of the date of registration. The business must also comply with the described rules in handling complaints. They must take complaints seriously, whether they are written, oral or electronic, to look over them within a minimum of a one-month period, and provide information on complaints electronically to National Bank every month.
These factors can affect the way in which a serious applicant approach licensing.
Think of the Georgian VASP as a concept for a company rather than a series of forms that need to be filled out.
The company’s structure, model of service model, and technological capabilities, AML controls as well processes for regulating capital, risk and customer service processes have to be coherent.
Georgia is still a great location for crypto and fintech businesses. The framework for regulation provides an easily-defined route to the market. However, the best starting point isn’t about how fast it is possible to obtain a license.
It’s about being able to describe clearly what your company’s crypto operations will be doing and proving that the company is prepared to carry out the work within the Georgian legal framework.
