It’s not clear enough to describe a regulatory application like “We’re creating our own crypto platform”.
Are customers able to exchange crypto in exchange for fiat currency? Does the platform transfer virtual assets? Does the company control over the wallets of clients as well as private keys? Are they managing a trading platform or lending against digital assets or is it planning to issue tokens?
Those differences matter when pursuing a crypto license in Georgia because the services a company intends to provide affect its regulatory preparation, documentation, controls, and capital requirements.
Georgia is an ideal place to start fintech businesses, however for them to get into the state-regulated virtual asset market is more than registering a business and building a website.
Then, you need to define the service.
Businesses offering virtual asset services to third-party clients 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 actions like virtual asset exchange and transfer as well as trading platform administration and custody management for cryptocurrency. The regulatory information provided states that the concept of custody extends to the administration of the clients’ private keys or wallet.
The design and technical aspects of the crypto product is crucial to its status with respect to regulation.
Before submitting an application for a license for a business founder looking to obtain an e-currency license in Georgia must outline the customer journey. What happens after a user deposits funds? Who is in charge of your wallet? Can assets be exchanged or transferred? Which party is authorized to authorize transactions?
Questions that are precise and clear help determine what the company will be doing.
Your Business Plan must be able to describe a real-world business
VASP applications also require more than a pretty pitch deck.
According to the supplied information according to the provided information, the National Bank expects a detailed business plan containing financial projections that cover at least three years, which includes the cost of operations, revenue, and growth assumptions. The plan must also demonstrate the genuine intent to operate in Georgia.
This need should be taken seriously and addressed as early as possible.
Investors can inquire about how fast the business will expand. A business plan for a regulatory operation must also contain information about how the business will be managed in a responsible manner.
Georgians applying for a VASP licence shouldn’t treat the commercial model as though it was unrelated. Instead, they should connect them.
AML cannot be added at the end
PB Services has described the preparation process as a major element of the measures to prevent the financing of terrorists and money laundering.
The material is specifically cautioned against the importation of a policy regarding AML from a different jurisdiction, as Georgian regulations need to be integrated into the structure of a company.
The operational systems play a role as well. The business plan must show that the system can detect possible suspicious transactions and the associated activities.
In practice it is essential that compliance be a factor in product development before launch. It isn’t a good idea to design a platform before deciding how AML policies are to be implemented. This can lead to costly redesigns and delays.
The Services You Select Can Change Your Capital
Knowing the business model as early as is possible is important for a number of reasons, including regulatory capital.
As per the thresholds listed in the materials used for the source, kiosks as well as exchanges require 150 000 GEL. Administration of the trading platform needs 350,000 GEL while other covered services need 250,000 GEL. If multiple services are provided the threshold that’s highest applies.
This is separate from ordinary capital used for investment or operational purposes. Documentation that proves the required amount was actually funded is required with the application and the capital should remain in operation throughout its duration.
The founder that wants to get a crypto-blockchain license in Georgia should therefore take into consideration the regulatory capital in his budgeting and not wait until all the other work has been completed.
The registration process is not the end of compliance work
The compliance calendar will not disappear at the moment of approval. It is a requirement that includes continuous obligations pertaining to risk management, cybersecurity and technological resilience. They also cover record retention, independent reviews customer complaints, as well as record retention.
For example an opinion of an independent auditor regarding the risk-management framework has to be obtained within 12 months of registration. Companies must also adhere to the guidelines described to handle complaints. They are required to take complaints seriously, whether they’re written, verbal or electronic, and to examine them within a one-month time frame, and to send statistics on complaints electronically to National Bank every month.
These aspects can alter the way a serious license applicant approaches licensing.
Think of the Georgian VASP as a visual design for a business rather than a set of forms to fill out.
The structure of the company, its service model and technology AML controls, regulatory capital processes, risk management, and the customer’s processes must be able to work together.
Georgia is continuing to provide opportunities for fintech and crypto businesses, and its regulatory framework is a well-defined pathway to the market. But the most effective starting point isn’t determining how quickly an approval can be obtained.
You must be able to explain in detail how your crypto-business is planning to do and prove that you are prepared to comply with Georgia’s regulations.