The regulation application should not include the following statement “We are in the process of launching a cryptocurrency platform”.
Are customers able to exchange crypto in exchange for fiat currency? The platform will allow the transfer of virtual assets? The company will have access to client wallets as well as private keys? Does it manage an online trading platform and lending against digital assets, or intending to issue tokens?
These differences are important when obtaining permission to operate a cryptocurrency in Georgia. The service that the business plans to offer affects its regulatory preparation, documents control, documents, and capital requirements.
Georgia is an ideal place to start fintech businesses, however to enter its regulated virtual asset market is more than simply registering a company and establishing a website.
Definition of the service
Businesses that offer virtual-assets services to third party clients must register as Virtual Asset Service Providers with the National Bank of Georgia under the structure described by PB Services.
The scope of the concept includes things like virtual asset exchange and transfer, administration of trading platforms as well as cryptocurrency custody management. It is important to note that the provided regulation states that the custody concept also extends to the management of a user’s private account or key.
This makes the design of an crypto-product important to its regulation status.
Before submitting an application for a license, a founder who is looking to obtain an e-currency license in Georgia must map out the customer’s journey. What happens after a user deposits funds? Who is in charge of your wallet? Can assets be traded, or transferred? Which authority authorizes transactions?
The clarity of the answers can help to determine what the company will do.
Your Business Plan Has to Describe a Real Business
VASP applications also require more than just a gorgeous pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections that last at least three years. This must include income, expenses and growth estimates. The plan must also indicate that there is a real intention to run in Georgia.
It is important to address this issue as quickly as you can.
Investors may ask questions such as how quickly the business will expand. The regulatory business plan should also describe how the operation will run in a responsible manner.
If a company is who are seeking a vasp license Georgia applicants must be able to connect the commercial model with the compliance model rather than using them as separate documents.
AML cannot be added at the end
Anti-Money Laundering and Counter-Terrorism Financing controls are among the most substantial parts of the plan as described by PB Services.
The document specifically warns against simply importing a policy on AML from a different jurisdiction, as Georgian AML regulations must be integrated into the overall framework of a company.
The operational systems matter in the same way. The business plan should demonstrate that the systems of the firm can identify suspicious or related transactions.
It is essential to consider compliance as a factor in product development. By creating a platform, then determining the way AML can be implemented and how it will work, you could cause inefficient delays and have to redesign.
The services you select can Change Your Capital
The need for regulatory capital is a further reason to define the business model in advance.
Based on the thresholds set in the documents, kiosks and exchange activities require 150 000 GEL. Administration of trading platforms is required to be 350,000 GEL, while other covered services need 250,000 GEL. If multiple services are being offered the threshold that is the most applicable determines.
This differs from operating capital or investment capital. The proof that the amount requested is actually financed must accompany the request. Likewise, the capital should be kept during the entire operation.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration Don’t End the Compliance Work
The compliance calendar does not disappear with the date of approval. The provided requirements outline the ongoing obligations in cybersecurity, risk management technological resilience fraud risk, records retention, independent review as well as customer complaints.
For instance an independent auditor’s report regarding the risk-management framework has to be sought within 12 months of the date of registration. Businesses also must follow the guidelines to handle complaints. They must accept complaints, whether they be oral, written or electronic, and to examine them in a maximum one-month period, and provide information on complaints electronically to National Bank every month.
These particulars can alter the way that a serious license applicant approaches licensing.
Instead of thinking of the Georgian VASP application as a set of forms required to obtain permission, think of it as the design of an authorized business.
The structure of the business, the service model technology, structure, AML controls, regulatory capital, risk procedures, and processes for customers must all make sense together.
Georgia offers opportunities to businesses in the field of fintech and crypto and the regulatory framework is a straightforward path to the market. However, the best starting point isn’t determining how quickly a license can be obtained.
It’s being able to explain precisely what your company’s crypto operations will perform and showing that your business is prepared to carry out the work within the Georgian regulatory framework.
