It’s not precise enough to describe a legal application like “We’re launching our cryptocurrency platform”.
Can users convert cryptocurrency into fiat? Can the platform be used to move virtual assets? Does the company have control of wallets for clients or keys? Do they plan to manage the trading platform or lend against digital assets?
Those differences matter when pursuing a crypto license in Georgia because the services the company plans to offer will impact its preparation for regulatory compliance and documentation, controls and capital requirements.
Georgia is a great place for fintech firms, but to enter its regulated virtual asset market, you need more than simply registering a business and creating a website.
Definition of the scope of service
Businesses that offer virtual assets services to third parties according to the model described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Included in the scope are activities like virtual transfer and exchange of assets and managing trading platforms and the management of crypto assets or custody. In addition, the provided regulatory information says the concept of custody also applies to managing a client’s private wallet or key.
The technical specifications of the product in question is pertinent to its place in terms of regulation.
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 client deposit funds? Who is the person who controls the wallet? Can assets be exchanged, or transferred? Which party is authorized to approve transactions?
Clarity in the answers helps to understand what the firm will actually do.
Your Business Plan must be able to describe a real-world business
A VASP application also needs more than an attractive pitch deck.
The National Bank will expect a comprehensive business plan that includes financial projections for at least three years. This should include revenues, expenses and growth estimates. The plan must also prove the intention to operate within Georgia.
That requirement deserves attention early.
A business plan written for investors can answer questions such as: How fast can the company grow? A regulation-based business plan should be able to explain how the business is to be run in a responsible manner.
Companies that are seeking a vasp Georgia license must prepare to join the commercial model and the compliance model rather than thinking of the two as separate documents.
AML is not able to be added at the End
PB Services has described the preparation process as an important element of the controls to stop financial crime and the financing of terrorists.
The information warns explicitly that importing an AML Policy from another country will not be enough as Georgian rules must be incorporated into a company’s framework.
It is equally important to consider the operational systems. Business plans should prove that the business’s system firm can identify suspicious or related transactions.
Practically, the quality of a product has to influence its development before it is launched. When you build a platform, and then deciding on the way AML works and how it will work, you could cause unnecessary delays and even redesign.
Capital is contingent on the Services You Choose
The necessity of establishing an early business plan is due to capital required by the regulatory authorities.
Under the thresholds provided in the document Transfer and exchange operations which include kiosks, are required to be 150,000 GEL. Management of a trading platform for trading is required to be 350,000 GEL and other covered services require 250,000 GEL. When multiple services are provided the threshold that is the most applicable determines.
This differs from operating capital or investment capital. The proof that the amount requested is actually funded must accompany the request. Additionally, the capital must be maintained all through the operation.
The founder that wants to apply for a crypto-blockchain licence in Georgia must therefore consider the regulatory capital in his budgeting prior to the time that the rest is completed.
Registration isn’t enough to complete the Compliance Work
The approval is not the point at which the compliance calendar disappears. The guidelines outline regular obligations related to risk management and cybersecurity technology resilience and fraud risk, and the retention of records, independent reviews and complaints from customers.
In order to obtain an audit report from an independent auditor on the risk management framework the company must be registered within 12 months. The business must also comply with the described rules regarding handling complaints. They are required to accept all complaints, whether they be oral, written or electronic, to look over them within a one-month period, and provide figures on complaints submitted electronically to National Bank every month.
These particulars affect the manner serious applicants must take the licensing process.
Consider the Georgian VASP as a design for a company rather than a series of forms that need to be filled out.
The structure of the business, the service model technology, AML controls, capital regulations processes, risk management, and customer processes have to connect.
Georgia offers opportunities to businesses in the field of fintech and crypto and the regulatory framework offers a clear path into the market. The best place to begin is not to ask whether a license will be issued.
You must be able to describe in detail what your crypto-business’s goals are and show that you’re ready to comply with Georgia’s regulations.