“We’re launching a crypto platform” isn’t the most precise description of a regulatory app.
Can customers trade cryptocurrency for fiat? Does the platform transfer virtual assets? Does the company have charge of client wallets or keys? Is it administering the trading platform and lending against digital assets or is it planning to issue tokens?
These distinctions matter when applying for permission to operate a cryptocurrency in Georgia. The type of service the business plans to offer determines the preparation of its regulatory documents controls, and capital requirements.
Georgia is an ideal location to start fintech businesses, however for them to get into the state-regulated virtual asset market requires more than just registering your company and establishing a website.
First, let’s define the service.
Companies that offer 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.
Included in the scope are actions like virtual transfer and exchange of assets as well as managing trading platforms and custody management for cryptocurrency. The regulations state that the custody concept stretches to the administration of the clients’ private keys or wallet.
That makes the technical design of a product in the crypto space relevant to its regulatory status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when a customer deposit their money? Who is the person who controls the account? Can assets be exchanged for or transferred? Who can approve transactions?
Clear answers help establish the exact nature of what the business will be doing.
Your Business Plan Has to be able to describe a real-world business
VASP applications require more than just a visually appealing pitch deck.
The National Bank will expect a comprehensive business plan that includes projections of financials for at least three years. This should include revenue, expenses and growth assumptions. The plan must also indicate genuine intent to do business in Georgia.
This is a need that needs to be addressed as soon as possible.
Investors can inquire about how quickly the business will grow. The business plan for regulatory compliance should also describe how the operation is to be run responsibly.
Georgians who apply for a vasp licence should not treat the commercial model as though it was unrelated. Instead they should link them.
AML Does not qualify for inclusion in the End
The Anti-Money Laundering as well as the Counter-Terrorism Controls on financing are among the most substantial parts of the process described by PB Services.
The information warns explicitly that importing an AML Policy from another country will not be enough as Georgian rules must be incorporated into a business’s framework.
The operational systems are vital. Business plans should prove that the system of the company is able to detect any related or potentially suspicious transactions.
Practically speaking, the conformity of a platform must affect its design before it’s released. In the process of creating a platform and then determining how AML will work, you can cause delay and unnecessary changes.
The services you choose to use can Change Your Capital
Another reason is regulatory capital. to determine the business model early.
According to the thresholds in the documents, kiosks and exchange activities need 150 000 GEL. Administration of trading platforms needs 350,000 GEL, while other covered services need 250,000 GEL. The highest threshold applies for multiple services.
This is distinct from operating capital or capital investment. A proof that the requested amount is actually paid for must accompany the request, and the capital needs to be maintained all through the operation.
A person who wants to apply for a crypto-blockchain license in Georgia is required to think about regulatory capital in the course of financial planning, but not after the rest of the application is complete.
Registration is not the end of the compliance process.
The compliance calendar does not end when you have approval. The provided requirements outline regular obligations that involve risk management, cybersecurity technology fraud risk, recording retention, independent review and complaints from customers.
For instance, an independent auditor’s opinion regarding the risk-management system must be sought within 12 months of the date of registration. Businesses also must follow the guidelines described to handle complaints. They must take complaints seriously, whether they’re written, oral or electronic, to review the complaints within a maximum of one month period, and to provide figures on complaints submitted electronically to National Bank every month.
The details of these changes affect how an applicant who is serious should approach licensing.
Instead of thinking of a Georgian VASP application as a set of forms needed to receive permission imagine it as the style of an regulated business.
A company’s structure, service model and technology, AML controls as well the procedures for risk, capital requirements and customer-facing processes should be coherent.
Georgia is a good location for crypto and fintech companies. The framework for regulation provides an established path to market. However, the best starting point isn’t asking how quickly the license will be granted.
It’s the ability, specifically, to detail what your crypto company plans to do and to prove that your company will be operating within the legal framework of Georgia.