The application for regulatory approval should not include the statement “We are launching a cryptocurrency platform”.
Are customers able to exchange crypto in exchange for fiat currency? Will the platform be able to transfer virtual assets? The company will have control over wallets for clients and private keys? Do they manage a lending platform for digital assets in the process of distributing tokens or overseeing a trading system?
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 location for fintech companies, but for them to get into the state-regulated virtual asset market, you need more than registering a business and building a website.
First, you must define the service.
In the framework outlined by PB Services, businesses providing covered virtual asset services to third parties are required to register as virtual asset service providers (ASP) with the National Bank of Georgia.
Included in the scope are the activities of virtual asset exchange and transfer and the administration of trading platforms as well as cryptocurrency management or custody. The important thing to note is that the legal information states that the concept of custody also applies to administration of a client’s private keys or wallet.
This means that the design of cryptocurrency-related products relevant to their regulatory status.
Anyone who wants to apply for an crypto license in Georgia must map out the customer’s journey before making the request. What happens when a client deposits money? Who is in charge of your account? Can assets be transferred or exchanged? Who is the person who has the authority to approve a transaction?
The answers are clear and help determine what the company will actually be doing.
Your business plan should describe an actual business
VASP applications need more than just a visually appealing 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 that cover a minimum period of three years. They include expenses, revenue, and the growth forecast. The plan must also indicate the intention to operate within Georgia.
This is a need which must be addressed early.
Investors are able to ask questions about how quickly the business will grow. The business plan for regulatory compliance should include a description of how the business will be managed responsibly.
Georgians applying for a VASP license shouldn’t view the commercial model as if it was unrelated. Instead they should join them.
AML is not able to be added at the End
PB Services has described the preparation process as an important part of which are the controls to stop money laundering and terrorist financing.
The document specifically states that simply the import of an AML policy from another state isn’t enough because Georgian laws must be integrated into the firm’s framework.
It is equally important to look at the operational systems. Business plans should prove that the system of the company can detect suspicious transactions.
Practically, the compliance of a product has to influence its design before it’s launched. By building a platform and then deciding on the way AML will function and how it will work, you could cause inefficient delays and have to redesign.
Capital is contingent on the Services You Choose
The necessity of establishing an early business plan is also due to capital required by the regulatory authorities.
Under the thresholds provided in the source material Transfer and exchange operations, including kiosks, require 150,000 GEL. Trading-platform management requires 350,000 GEL however other covered services only require 250,000 GEL. If several services are offered the threshold that’s the highest is used.
This is different from normal operating capital or capital investment. Evidence that the required amount is actually paid for must accompany the request. Likewise, the capital needs to be maintained all through the operation.
A person who wants to submit an application for a crypto blockchain license in Georgia must consider the regulatory capital at the time of financial planning, and not after the rest of the application has been completed.
Registration isn’t the end of task of ensuring compliance.
The approval is not the point when the compliance calendar ceases to exist. The guidelines outline regular obligations related to cybersecurity and risk management technology resilience, fraud risk as well as record retention, independent review and customer complaints.
To get an independent audit opinion on the framework for risk management companies must register within twelve months. The rules state that businesses must accept complaints either in writing or in oral form and review them within one month. Additionally, they must send statistics of complaints to the National Bank electronically each month.
These aspects affect the way serious applicants must approach licensing.
Imagine an Georgian VASP Application as the look of a regulated business.
The structure of a company’s business, its service model, and technology, AML controls as well regulatory capital, risk procedures and customer-facing processes should be consistent.
Georgia is still a great location for crypto and fintech companies. Its regulatory framework provides an established path to market. The best place to start is to inquire about what speed a license is going to be issued.
It’s the ability, specifically, to define what your crypto business will be doing and prove that your company will be doing it within Georgia’s legal framework.
