The regulation application should not contain the words “We are in the process of launching a cryptocurrency platform”.
Can customers trade cryptocurrency to fiat? Will the platform be able to move virtual assets? Will the company have access to client wallets and private keys? Is it managing a trading platform or lending against digital assets or is it planning to issue tokens?
These distinctions are crucial when applying for a crypto-license in Georgia due to the products and services a business plans to provide will affect the requirements of its regulators, documentation, control, 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 a business and creating a website.
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, management of trading platforms, as well as management or custody of cryptocurrency. The important thing to note is that the regulation states that the custody concept extends to managing a client’s private key or wallet.
The design and technical aspects of the crypto product is crucial to its status as a result of regulations.
Anyone who wants to obtain cryptocurrency licenses in Georgia should map out the intended customer journey prior to preparing the application. What happens when a customer deposit funds? Who controls your wallet? Are assets able to be exchanged or transferred? Which party authorizes transactions?
The answers are clear and help determine what the company will actually be doing.
Your Business Plan Should Describe an actual company
VASP applications require more than a stunning pitch deck.
According to the information supplied, the National Bank requires a detailed plan of business that contains financial projections spanning a minimum period of three years. These include income, expense, as well as the growth forecast. The plan must also demonstrate that there is a genuine desire to be a business in Georgia.
This requirement should be addressed early.
A business plan for investors can answer questions such as: How fast can the company grow? A regulation-based business plan should 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 is not able to be added to the End
PB Services describes the preparation as a sequence of steps that include anti-money laundering and counter-terrorism financing controls.
The material warns specifically that importing an AML Policy from another jurisdiction will not be enough as Georgian laws must be included into a company’s framework.
Additionally, the operational systems are important. The business plan should show that the system can recognize possible suspicious transactions and the associated activities.
Compliance must be a factor in product development. When you build a platform, and then deciding on how AML will function it can lead to inefficient delays and have to redesign.
The Services You Choose Can Impact Your Capital
The need for regulatory capital is a further reason to identify the business model earlier.
In accordance with the thresholds set forth in the source material for transfers and exchanges, including kiosks have to be at minimum 150,000 GEL. Platform management for trading requires 350,000 GEL however other covered services need only 250,000 GEL. The highest threshold is required for multiple services.
This is different from regular capital used for investment or operational purposes. A proof that the amount is actually financed must be submitted with the application and the capital has to be maintained throughout operations.
The founder who wishes to obtain a crypto-blockchain license in Georgia should therefore take into consideration the capital required by Georgia’s regulatory authorities when planning his finances before the other aspects have been taken care of.
Registration isn’t the only aspect of the compliance process.
The calendar of compliance doesn’t end when you have approval. The obligations include regular obligations relating to cybersecurity, risk management and technological resilience. They also cover the retention of records, independent reviews customer complaints, as well as records retention.
For example, an independent auditor’s opinion regarding the risk-management system must be sought within 12 months from the time of registration. The described complaint-handling rules also oblige businesses to take complaints in oral, written or in electronic format and to examine them within a period of one month, and provide complaint statistics electronically to the National Bank each month.
These factors affect the way a serious applicant should approach licensing.
Consider the Georgian VASP as a style for a business, rather than a set of forms to be filled out.
The company structure, service model technology, structure, AML controls, regulatory capital, risk procedures, and customer processes have to be able to work together.
Georgia remains a wonderful place to start fintech and crypto businesses. Its regulatory framework offers an easy path to market. However, the best starting point isn’t to ask how fast it is possible to obtain a license.
You must be able to describe in detail what your crypto-business’s goals are and prove that you’re prepared to comply with Georgia’s rules.