It’s not clear enough to describe a legal application as “We’re the first to launch our crypto platform”.
Can customers exchange crypto for fiat currencies? Can the platform transfer virtual assets? The company will have control over wallets for clients as well as private keys? Do they plan to manage a trading platform, or loan against digital assets?
These differences matter when seeking a cryptocurrency license in Georgia. The kind of services a business intends to offer affects its regulatory preparation, documents, controls, as well as capital requirements.
Georgia has a legal market for virtual assets, which is attractive to fintech firms. However, gaining access to this market requires much more effort than just registering your business and then launching your site.
The definition of the service
Companies that offer virtual asset services to third parties under the framework described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This covers virtual asset transfer and exchange, administration of trading platforms, as well as management or custody of cryptocurrency. It is important to note that the provided legal information states that the custody concept also extends to administration of a client’s private wallet or key.
This makes the design of a crypto-product relevant to its 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 consumer deposit funds? Who owns the account? Assets can they be transferred or exchanged? Who is the one who authorizes a transaction?
A clear understanding of the answers is helpful to determine what the company is actually doing.
Your Business Plan Has to provide a realistic description of your business
A VASP application requires more than just a nice pitch deck.
Based on the information provided according to the provided information, the National Bank expects a detailed business plan with financial projections covering at least three years, which includes revenue, expenses, and growth projections. The plan must also indicate that there is a genuine desire to operate in Georgia.
This is an issue that needs to be addressed quickly.
A business plan to be used by investors will answer questions like: How quickly can the business grow? A plan for business that is regulatory must include a description of how the operation will operate in a safe manner.
Businesses seeking vasp Georgia license must prepare to link to the commercial model as well as the compliance model rather than treating the documents as distinct documents.
AML cannot be added to the End
The Anti-Money Laundering as well as the Counter-Terrorism Financing controls are one of the major components of the plan provided by PB Services.
The document specifically warns against importing policies on AML from another jurisdiction because Georgian laws must be integrated into the overall framework of the company.
The operational systems play a role in the same way. The business plan must demonstrate that the system in place by the company can spot related and suspicious transactions right from the beginning.
Practically speaking, the conformity of a product should influence its development prior to being released. By creating a platform, then deciding on how AML can be implemented it can lead to unnecessary delays and even redesign.
Capital is contingent on the Services You Choose
Knowing the business model as early as is possible is crucial for a variety of reasons, not least the need for regulatory capital.
As per the thresholds set out in the document the transfer and exchange activities including kiosks, will require 150,000 GEL. Administration of trading platforms is required to be 350,000 GEL, while other covered services require 250,000 GEL. The highest threshold applies for multiple services.
This differs from operating capital or investment capital. Proof that the required amount is actually financed must accompany the request. Likewise, the capital should be kept all through the operation.
A business owner who intends to apply for a crypto blockchain license in Georgia must consider the regulatory capital prior to the start of financial planning, not after the rest of the application is completed.
Registration doesn’t complete the compliance Work
The calendar of compliance does not end when you have approval. The requirements include ongoing obligations related to cybersecurity, risk management and technological resilience. They also include records retention, independent reviews, customer complaints, and records retention.
For example an independent auditor’s view on the risk management framework should be sought within 12 months of the date of registration. The described complaint-handling rules also require companies to accept complaints in written, oral or in electronic format and to evaluate them within a time limit of one month, and provide details of complaints electronically to National Bank each month.
These factors can affect the way a serious license applicant is approached when it comes to licensing.
Instead of thinking of the Georgian VASP application as a collection of forms required to obtain permission to use it, think of it as the structure of an authorized business.
The corporate structure, the service model technology, structure, AML controls, capital regulations, risk procedures, and the customer’s processes must connect.
Georgia has opportunities for crypto and fintech companies, and the legal framework provides a straightforward path to the market. The best place to begin is to not ask about what speed a license is going to come through.
It’s being able to explain clearly what your cryptocurrency business plans to do and demonstrating that the business is ready to conduct it within the Georgian regulatory framework.