The regulatory application should not include the statement “We are creating a cryptocurrency platform”.
Customers can exchange cryptocurrency in exchange against fiat? Will the platform be able to move virtual assets? Will the company have control over the wallets of clients and private keys? Do they manage a digital asset lending platform and issuing tokens, or running a trading system?
These distinctions are critical when applying for an crypto-license in Georgia due to the products and services a business plans to provide will affect its regulatory requirements such as documentation, control and capital requirements.
Georgia offers a regulated market for virtual assets, which is appealing to fintech companies. However, entering this market takes more effort than simply registering your business and then launching your site.
First, define the service
In the framework outlined by PB Services, businesses providing covered virtual asset services to third parties must register as virtual asset service providers (ASP) with the National Bank of Georgia.
This includes transfer of virtual assets and exchange, administration of trading platforms and management or custody of cryptocurrency. It is important to note that the provided regulations state that the custody concept also extends to administration of a client’s private key or wallet.
That makes the technical design of a cryptocurrency relevant to its regulatory position.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when the customer deposit their money? Who owns the account? Can assets be traded or transferred? Which party is authorized to authorize transactions?
It is important to know what the firm will be doing.
Your Business Plan must describe the Real Business
VASP applications need more than an appealing pitch deck.
The National Bank will expect a thorough business plan with projections of financials for minimum three years. The plan should contain income, expenses and growth estimates. The plan must also reflect a genuine intention to operate in Georgia.
This is a requirement which must be addressed early.
Investors can ask questions like how quickly the business will grow. The business plan for regulatory compliance should include a description of how the business will run in a responsible manner.
Georgians who apply for a vasp licence should not treat the commercial model as if it was unrelated. Instead they should be able to connect them.
AML is not able to be added at the very end
PB Services has described the preparation process as an important component of which is the measures to prevent money laundering and terrorist financing.
The provided material specifically warns against the importation of a policy regarding AML from a different state, since Georgian laws must be incorporated into the framework of the company.
The operational systems play a role as well. The business plan should demonstrate that the company’s system can recognize potential suspicious transactions as well as related transactions.
Practically speaking, the conformity of a platform must affect its development before it is released. By building a platform and then deciding the way AML works it can lead to unnecessary delays and redesign.
Capital is contingent on the Services you choose
Regulatory capital is another reason to establish the business model before.
Based on the criteria set out in the source material for transfer and exchange, as well as kiosks have to be at or near 150,000 GEL. Trading platform administration requires 350,000 GEL and other covered services need 250,000 GEL. If multiple services are being offered the threshold that is the most applicable governs.
This is different from regular capital investment or operating capital. Evidence that the required amount is actually funded should accompany the request. Likewise, the capital should be kept all through the operation.
An entrepreneur who is planning to apply for a an authorization for crypto-blockchain in Georgia must therefore consider regulatory capital as part of financial planning not until the rest of the application has already been made.
Registration doesn’t complete the compliance work
The compliance calendar doesn’t end when you have approval. The requirements include continuing obligations related to cybersecurity, risk management and technological resilience. They also cover the retention of records, independent reviews customers’ complaints, retention of records.
A risk management framework, for example, will require an opinion by an independent auditor within the 12 months of its registration. The described complaint-handling rules also stipulate that businesses must accept complaints in written, oral or in electronic format, review them within a maximum of a month, and provide details of complaints electronically to National Bank each month.
Those details change how an experienced applicant approaches licensing.
Imagine that you are using a Georgian VASP Application to represent the layout of a unregulated business.
A company’s structure, business model, and technological capabilities, AML controls as well the procedures for risk, capital requirements and customer procedures must be consistent.
Georgia continues to offer opportunities for fintech and crypto businesses, and its regulation framework gives businesses a clearly defined pathway to the market. The best place to start isn’t about how fast it is possible to obtain a license.
It’s describing clearly what your cryptocurrency business plans to do and demonstrating that the business is ready to do it within Georgia’s legal framework.