The regulatory application shouldn’t include the following statement “We are creating a cryptocurrency platform”.
Can users convert cryptocurrency into fiat? Does the platform transfer virtual assets? Will the company have control over client wallets and private keys? Does it manage an online trading platform, lending against digital assets, or thinking of releasing tokens?
These differences are essential when applying for an crypto-license in Georgia as the type of services a company plans to provide will affect its requirements for regulatory compliance such as documentation, control and capital requirements.
Georgia is an ideal location to start fintech businesses, however for them to get into the state-regulated virtual asset market requires more than just registering your business and building 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.
In the scope of this are things like virtual asset exchange and transfer along with managing trading platforms and the management of crypto assets or custody. The regulatory information provided states that the custody concept stretches to the administration of client’s private keys, or wallet.
This makes the design of cryptocurrency-related products relevant to their regulation status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens after a client deposits funds? Who controls your account? Are assets traded or transferred? Which person is authorized authorize transactions?
Answers that are specific and clear can help decide what the business is doing.
Your business plan must describe a real business
A VASP application requires more than just a nice pitch deck.
According to the information provided according to the information provided, according to the information provided, National Bank requires a detailed business plan that contains financial projections spanning an minimum of three years. They include revenue, expense, and growth expectations. The plan must also demonstrate the genuine intent to operate in Georgia.
This requirement should be addressed early.
A business plan written for investors answers questions like how fast the company can grow. The business plan for regulatory compliance should explain how the business will be managed responsibly.
If a company is who are seeking a vasp license Georgia applicants must be able to link the commercial model with the compliance model instead of using them as separate documents.
AML is not able to be added at the End
PB Services has described the preparation process as a key component of which is the controls against financial crime and the financing of terrorists.
The document specifically states that just taking an AML policy from a different jurisdiction is insufficient because Georgian laws must be incorporated into the company’s structure.
The operational systems play a role too. The business plan should show that the system can identify potentially suspicious and related transactions.
Compliance needs to be an aspect of product development. It is not advisable to create a platform prior to deciding how AML policies are to be implemented. This can lead to costly redesigns and delays.
Capital is Dependent on the Services you Choose
Determining the business model as early as possible is vital for a variety of reasons, not least the need for regulatory capital.
Based on the thresholds set in the documents, kiosks and exchange activities are required to be 150 000 GEL. Administration of the trading platform requires 350,000 GEL while other covered services require 250,000 GEL. If several services are offered the threshold which is the highest is used.
It is not the same as ordinary operating capital. Evidence that the required amount was actually funded must be included with the application and the capital must be maintained throughout operations.
A business owner who intends to submit an application for a crypto blockchain license in Georgia is required to think about regulatory capital in the course of financial planning, not after the rest of the application is complete.
Registration Doesn’t Finish the Compliance Work
The compliance calendar doesn’t end with approval. The guidelines provide the ongoing obligations in risk management, cybersecurity, technological resilience fraud risk, record retention, independent review and complaints from customers.
For instance an opinion of an independent auditor regarding the risk-management system must be obtained within 12 months of the date of registration. According to the rules, businesses are required to accept complaints in written or oral form and review them within one month. They also have to send statistics of complaints to the National Bank electronically each month.
These details affect how serious applicants should approach licensing.
Instead of thinking of the Georgian VASP application as a set of documents needed to receive permission, think of it as the design of a regulated business.
The structure of a company’s business, its service model and the technology used, AML controls as well processes for regulating capital, risk and customer service processes have to be coherent.
Georgia remains a wonderful place to start fintech and crypto companies. Its regulatory framework provides an easy path to market. But the strongest starting point isn’t about how fast it is possible to obtain a license.
It’s the ability, with specificity, explain what your crypto-related business plans to do and to demonstrate that the company will be doing so within the Georgian legal framework.