It’s not accurate enough to describe a legal application as “We’re the first to launch our cryptocurrency platform”.
Can customers trade cryptocurrency against fiat? Can the platform be used to transfer virtual assets? Do they have access to client wallets and private keys? Is it planning to run an exchange platform or lend against digital assets?
The distinctions are significant when it comes to obtaining a crypto license in Georgia due to the services that a company intends to provide influence its regulatory preparation, documentation, controls, and capital requirements.
Georgia offers a regulated market for virtual assets that is attractive to fintech companies. However, entering the market is more difficult than simply registering your business and launching a website.
Then, you must define the Service.
Businesses that offer virtual-assets services to third party clients must become Virtual Asset Service Providers with the National Bank of Georgia under the rules laid out by PB Services.
This includes the transfer of virtual assets, exchange, management of trading platforms and the management or custody of cryptocurrency. The regulation’s information states that the custody concept extends to the management of a client’s private keys, or wallet.
This creates the need for cryptocurrency-related products relevant to their regulatory status.
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 deposits money? Who is the person who controls the account? Can assets be traded, or transferred? Who authorizes the transaction?
Clare answers can help define the exact nature of what the business will be doing.
Your business plan must describe the real-world business
A VASP application also needs more than an attractive pitch deck.
Based on the information provided according to the provided information, the National Bank expects a detailed business plan that includes financial projections for at least three years, which includes the cost of operations, revenue, and growth projections. The plan should also show that there is a genuine desire to conduct business in Georgia.
This requirement should be addressed early.
A business plan written to be used by investors addresses questions like how fast the company’s growth rate can be accelerated. The plan of business for regulation should be able to describe how the company will operate responsibly.
Georgians who apply for a vasp license shouldn’t view the commercial model as if they were not connected. Instead they should link them.
AML cannot be added at the end
PB Services has described the preparation process as an important part of it is the controls to stop the financing of terrorists and money laundering.
The document warns that the import of an AML Policy from a different jurisdiction is not enough since Georgian regulations must be integrated into a company’s framework.
The operating systems are essential. Business plans should prove that the system used by the company can detect related or potentially suspicious transactions.
Practically, the quality of a product should influence the development of the product before it can be released. In the process of creating a platform and then determining how AML works in the future, you risk causing inefficient delays and have to redesign.
Capital is Dependent on the services you select
The need for regulatory capital is a further reason to establish the business model in advance.
As per the thresholds set out in the document, exchange and transfer activities such as kiosks, need 150,000 GEL. Administration of trading platforms needs 350,000 GEL, while other covered services need 250,000 GEL. The highest threshold is required when multiple services are being offered.
This is separate from ordinary capital for investment or operating. The application has to be accompanied by proof of the required amount is financed.
A business owner who intends to submit an application for a crypto blockchain license in Georgia needs to consider regulatory capital prior to the start of financial planning, and not after the rest of the application has been submitted.
Registration isn’t enough to complete the Compliance Work
Approval isn’t the moment when the compliance calendar ceases to exist. The provided requirements outline the ongoing obligations in risk management, cybersecurity, technological resilience and fraud risk, as well as records retention, independent review and customer complaints.
A risk-management framework For instance, a risk-management framework will require an opinion by an independent auditor within 12 months of its registration. The business must also comply with the rules set out regarding handling complaints. They are required to accept complaints, regardless of whether they be oral, written or electronically, and review the complaints within a maximum of one month period, and to provide statistics on complaints electronically to National Bank every month.
These particulars can alter the way a serious license applicant approach licensing.
Imagine an Georgian VASP Application as the design of an legally regulated business.
It is vital that the corporate structure as well as the technology used, AML controls and regulatory capital, as well as customer processes, are in harmony.
Georgia is still a great place for fintech and crypto businesses. The regulatory framework it has provides a well-defined path to the market. But asking about how quickly you can get a license isn’t the best way to begin.
It’s describing in clear terms what your company’s crypto operations will do and demonstrating that the company is prepared to do it within the Georgian legal framework.