“We’re creating a crypto platform” isn’t a precise enough description of a regulatory app.
Are customers able to exchange crypto in exchange for fiat currencies? Can the platform be used to transfer virtual assets? Will the company have control over client wallets as well as private keys? Are they managing an online asset lending platform, issuing tokens, or managing a trading system?
These distinctions are crucial when applying for the crypto-license in Georgia since the services a company is planning to provide will affect the requirements of its regulators and documentation, as well as control and capital requirements.
Georgia provides a well-regulated market for virtual assets that is attractive to fintech firms. However, entering the market is more difficult than simply registering a company and then launching your site.
First, you need to define the service.
Companies that provide virtual assets services to third party clients must sign up as Virtual Asset Service Providers (VASP) at the National Bank of Georgia under the rules laid out by PB Services.
The scope includes activities such as virtual-asset exchange and transfer, management of platforms for trading as well as cryptocurrency custody management. It is important to note that the provided regulation states that the concept of custody also applies to the management of a user’s private key or wallet.
This creates the need for cryptocurrency-related products relevant to their regulatory status.
An entrepreneur who is interested in getting the crypto license in Georgia must therefore sketch out the proposed customer journey before preparing the application. What happens after the client deposit their money? Who is the person who controls the account? Can assets be exchanged for or transferred? Who is the party that has the authority to approve a transaction?
Answers that are specific and clear help determine what the company will be doing.
Your Business Plan must describe a real business
A VASP application also requires more than a beautiful pitch deck.
The National Bank will expect a thorough business plan with financial projections over minimum three years. The plan should contain revenue, expenses and growth expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
This is a need that deserves to be addressed early.
A business plan for investors will address questions such as: How fast can the business grow? The business plan of the regulatory process must contain details on how the operation will be conducted with care.
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 at the very end
PB Services describes the preparation as a set of steps that includes anti-money laundering as well as counter-terrorism controls.
The provided material specifically warns against importing policies regarding AML from a different state, since Georgian rules must be integrated into the structure of a business.
Additionally, the operational systems are important. The business plan should prove that the company’s system can recognize possible suspicious transactions and the associated activities.
Practically, the quality of a product should influence the development of the product before it can be launched. In the process of creating a platform and then determining how AML works and how it will work, you could cause unnecessary delays and even redesign.
Capital is contingent upon the Services you choose
The necessity of establishing an early business plan is a result of the regulatory capital.
As per the thresholds set forth in the source material for transfers and exchanges, including kiosks are required to be at least 150,000 GEL. Trading-platform administration needs 350,000 GEL While other covered services need 250,000 GEL. The maximum threshold applies when multiple services are provided.
This is different from normal operating capital or capital invested. The evidence that the amount was actually funded must accompany the application, and the capital needs to be maintained throughout operations.
The founder that wants to obtain a crypto-blockchain license in Georgia should consider the regulatory capital when planning his finances prior to the time that all the other work has been completed.
Registration doesn’t complete the compliance Work
The calendar of compliance doesn’t expire with the approval. The requirements include regular obligations relating to cybersecurity, risk management and technology resilience. They also cover the retention of records, independent reviews, customer complaints, and retention of records.
For instance an opinion of an independent auditor on the risk-management framework must be obtained within 12 months from the time of registration. The rules on handling complaints require companies to accept complaints in written, oral or electronic formats and examine them within a period of one month, and then provide the details of complaints electronically to National Bank each month.
These aspects affect the way serious applicants must be approached when seeking licensing.
Imagine the Georgian VASP Application as the style of a unregulated business.
The company structure, service model, technology, AML controls, capital regulations, risk procedures, and customer processes have to integrate.
Georgia is a good location for crypto and fintech companies. The framework for regulation provides an easily-defined route to the market. The best way to begin is not by asking what speed a license is going to come through.
It’s being able to explain clearly what your crypto business will perform and showing that your business is prepared to do it within the Georgian regulatory framework.