The regulatory application shouldn’t contain the words “We are in the process of launching a cryptocurrency platform”.
Can customers trade cryptocurrency to fiat? Can the platform allow the transfer of virtual assets? Will the company be in charge of client wallets or keys? Will it manage a trading platform, or loan against digital assets?
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 to be able to access its controlled virtual asset market takes more than simply registering a company and establishing a website.
First, you need to define the service.
Businesses providing virtual-assets services for third party clients must sign up as Virtual Asset Service Providers (VASP) at the National Bank of Georgia under the structure described by PB Services.
This includes the transfer of virtual assets, exchange, the administration of trading platforms, as well as custody or management of cryptocurrency. In addition, the provided regulations state that the custody concept extends to managing a client’s private key or wallet.
This creates the need for the crypto-product relevant to its legal status.
An entrepreneur who is interested in getting cryptocurrency licenses in Georgia should therefore map the desired customer journey prior to developing the application. What happens after a user deposit funds? Who owns your wallet? Are assets able to be exchanged or transferred? Which party is authorized to approve transactions?
A clear understanding of the answers is helpful to understand what the firm will actually accomplish.
Your business plan must detail an actual business
VASP applications require more than a pretty pitch deck.
The National Bank will expect a detailed business proposal that includes projections of financials for minimum three years. This must include revenue, expenses and growth estimates. The plan must also reflect a genuine intention to operate in Georgia.
It is crucial to tackle this issue as quickly as possible.
Investors may ask questions such as how fast the business will grow. The business plan that is regulated must also describe how the operation is to be run responsibly.
Businesses that seek a vasp Georgia license should be prepared to join both the commercial model and compliance model instead of treating the documents as distinct documents.
AML Cannot be added to the end
PB Services describes the preparation as a set of steps that cover anti-money laundering, as well as anti-terrorism financing controls.
The supplied material specifically warns that just importing an AML policy from another state isn’t enough because Georgian laws must be integrated into the firm’s structure.
Additionally, the operational systems are vital. Business plans should prove that the business’s system business can spot related or potentially suspicious transactions.
Compliance needs to be an element in the development of products. It isn’t a good idea to create a platform prior to making a decision on how AML policies will be implemented. This can lead to costly redesigns and delays.
Capital Depends on the Services You Choose
Knowing the business model as early as is possible is essential for a variety of reasons, such as regulatory capital.
As per the criteria set out in the source material, transfer and exchange, as well as kiosks are required to be at or near 150,000 GEL. Administration of the trading platform is required to be 350,000 GEL and other covered services require 250,000 GEL. If several services are offered the threshold that’s highest applies.
It’s not the same as normal operating capital. Evidence that the required amount is actually financed must be included with the application and the capital must be maintained throughout the course of operations.
The founder who wants to obtain a crypto-blockchain permit in Georgia should therefore take into consideration the regulatory capital in his budgeting process and not wait until the rest has been completed.
Registration is not the end of the compliance process.
The compliance calendar does not end with approval. These requirements cover continuing obligations related to cybersecurity, risk management and technology resilience. They also address record retention, independent reviews customers’ complaints, record retention.
For instance an independent auditor’s report on the risk-management framework must be sought within 12 months from the time of registration. The guidelines for handling complaints oblige businesses to take complaints in oral, written or electronically and to review them within a maximum of one month, and provide information about complaints electronically to the National Bank each month.
These details can change the way in which a serious applicant takes licensing.
Imagine a Georgian VASP Application as the design of an unregulated business.
A company’s structure, business model and the technology used, AML controls as well processes for regulating capital, risk and customer-facing processes should be coherent.
Georgia is still a great place to start fintech and crypto businesses. The regulatory framework it has provides a well-defined path to the market. The best place to start is to not ask about the speed at which a license could come through.
You must be able to define in detail the goals of your business’s crypto-related activities will be, and demonstrate that you’re prepared to comply with Georgia’s regulations.