“We’re launching a crypto platform” isn’t an accurate enough description of a regulatory application.
Can customers exchange crypto for fiat currencies? Can the platform allow the transfer of virtual assets? Does the company have charge of client wallets or keys? Do they plan to manage the trading platform or lend against digital assets?
These distinctions matter when applying for permission to operate a cryptocurrency in Georgia. The type of service the company plans to provide influences its preparation for regulatory documents and controls and capital requirements.
Georgia is an ideal place for fintech companies, but to enter its regulated virtual asset market takes more than just registering your company and establishing a website.
First, let’s define the service.
Businesses offering virtual assets to third parties must sign up as Virtual Asset Service Providers at the National Bank of Georgia under the structure described by PB Services.
This covers virtual asset transfer and exchange, the administration of trading platforms, as well as the administration or custody of cryptocurrency. According to the regulations provided, the custody concept includes administration of the customer’s private key and wallet.
The technical specifications of the cryptocurrency product is crucial to its status in terms of regulation.
An entrepreneur who is interested in obtaining the crypto licence in Georgia should sketch out the customer’s journey before preparing the request. What happens after a customer deposits assets? Who controls the account? Can assets be exchanged for or transferred? Which party authorizes the transactions?
Clare answers can help define the exact nature of what the business will be doing.
Your Business Plan Should Describe an actual company
A VASP application needs more than an attractive pitch deck.
Based on the information provided, the National Bank expects a detailed business plan containing financial projections that cover at least three years, including revenues, expenses, as well as growth projections. The plan must also indicate an actual intention to operate in Georgia.
It is vital to address this issue as soon as is possible.
A business plan that is written for investors will address concerns like: How fast can the company grow? A regulatory business plan must be able to explain how the business will be conducted in a responsible manner.
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 cannot be added at the end
Anti-Money Laundering and Counter-Terrorism Controls on financing are among the most important components of the process described by PB Services.
The provided material warns that just import of an AML policy from another jurisdiction is not sufficient since Georgian laws must be integrated into the firm’s framework.
It is also crucial to look at the operational systems. The business plan must demonstrate that the system of the company is able to detect any suspicious or related transactions.
Practically, the quality of a product has to influence its development prior to being released. It is not advised to develop a platform without making a decision on how AML policies will be implemented. This can lead to unnecessary redesigns and delays.
The services you select can affect your capital
Knowing the business model as early as is possible is crucial for a variety of reasons, not least the need for regulatory capital.
Under the thresholds provided in the document Exchange and transfer activities, including kiosks, require 150,000 GEL. Administration of trading platforms is required to be 350,000 GEL in addition to other covered services require 250,000 GEL. The highest threshold applies when multiple services are being offered.
This differs from operating capital or investment capital. Evidence that the required amount has actually been funded is required with the application and the capital has to be maintained throughout operations.
A founder planning to get an authorization for crypto-blockchain in Georgia should consequently consider the possibility of regulatory capital in financial planning and not once the rest the application has already been put together.
Registration is not the end of the compliance process.
The calendar of compliance does not end when you have approval. It is a requirement that includes ongoing obligations related to risk management, cybersecurity and technology resilience. They also cover records retention, independent reviews customer complaints, as well as records retention.
To obtain an independent audit opinion regarding the risk management framework companies must register within twelve months. The rules for handling complaints require businesses to accept complaints in oral, written or electronic formats and to analyze them within a maximum of one month, and submit information about complaints electronically to the National Bank each month.
These factors can affect the way an experienced license applicant approach licensing.
Instead of thinking of an Georgian VASP application as a collection of forms required for obtaining permission imagine it as the style of an authorized business.
The structure of the business, the service model technology, structure, AML controls, capital regulations, risk procedures, and customer processes have to connect.
Georgia is a good place for fintech and crypto companies. 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 most effective way to start.
It’s being able, specifically, to describe what your crypto business intends to accomplish and prove that your company will be operating in accordance with the Georgian legal framework.