It’s not precise enough to define a regulatory application as “We’re the first to launch our cryptocurrency platform”.
Can users convert cryptocurrency into fiat? The platform will be able to transfer virtual assets? Does the company have charge of the wallets of clients or keys? Is it managing an exchange platform, lending against digital assets or is it planning to issue tokens?
The distinctions are significant when it comes to obtaining cryptocurrency licenses in Georgia due to the services that a company intends to provide influence its regulatory preparation as well as documentation, controls and capital requirements.
Georgia might be an appealing setting for fintech companies however, entering the virtual-asset marketplace now requires more than simply registering your company and creating a website.
First, define the service
Businesses that provide virtual assets services to third parties under the framework described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
The scope includes activities like virtual asset exchange and transfer, trading-platform administration and custody or management. According to the regulatory information supplied the concept of custody encompasses administration of the customer’s private key and wallet.
The technical structure of the product in question is relevant to its position with respect to regulation.
A founder interested in obtaining cryptocurrency licenses in Georgia should thus map out the intended customer journey prior to preparing the application. What happens when a customer deposits funds? Who is in charge of your account? Are assets able to be traded or transferred? Who is authorized to approve transactions?
A clear understanding of the answers is helpful to understand what the firm is actually doing.
Your Business Plan Must Describe the Real Business
VASP applications also require more than a pretty pitch deck.
The National Bank will expect a detailed business proposal that includes projections of financials for minimum three years. The plan should contain income, expenses and growth estimates. The plan must also indicate genuine intent to operate in Georgia.
This requirement should be addressed early.
A business plan for investors will address the following questions: How quickly will the company expand? The business plan for a regulatory operation must also contain details on how the business will be managed responsibly.
Georgians applying for a VASP licence shouldn’t treat the commercial model as if it was not related. Instead they should join them.
AML is not able to be added to the End
PB Services has described the preparation process as a major part of which are the controls against financial crime and the financing of terrorists.
The document warns that importing an AML Policy from another country will not be enough as Georgian rules must be incorporated into a business’s framework.
It is also crucial to consider the operational systems. The business plan must prove that the company’s system can recognize potentially suspicious and related transactions.
Practically, the compliance of a product must influence its development prior to being released. By building a platform and then deciding on the way AML will function, you can cause delay and unnecessary changes.
Capital is contingent on the Services You Choose
The need for regulatory capital is a further reason to define the business model earlier.
According to the criteria set out in the source material, transfers and exchange, which includes kiosks must be at or near 150,000 GEL. The administration of platforms for trading requires 350,000 GEL, while other covered services require 250,000 GEL. The highest threshold is required when a variety of services are offered.
This is different from normal operating capital or capital investment. The evidence that the amount has actually been funded is required with the application and the capital needs to be maintained throughout the course of operations.
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 doesn’t finish the formalization process.
The compliance calendar will not disappear at the moment of approval. The provided requirements outline regular obligations that involve risk management, cybersecurity technology fraud risk, record retention, independent review, and customer complaints.
For instance, an independent auditor’s opinion on the risk management framework should be sought within 12 months of the date of registration. Companies must also adhere to the described rules in handling complaints. They must accept complaints, regardless of whether they be oral, written or electronic, to review them within a minimum of a one-month time frame, and to send figures on complaints submitted electronically to National Bank every month.
The details of these changes affect how a serious applicant should approach licensing.
Imagine the Georgian VASP as a visual design for a company instead of a collection of forms to be filled out.
It is important that the corporate structure and technology, AML controls and regulatory capital, as well as customer processes, are all in harmony.
Georgia has opportunities for firms in fintech and crypto, and the legal framework provides a straightforward path to the market. But asking about how quickly you can obtain a license is not the best way to begin.
It is being able, specifically, to describe what your crypto business will be doing and demonstrate that the company will be doing it in accordance with Georgia’s legal framework.