The regulatory application shouldn’t include the following statement “We are launching a cryptocurrency platform”.
Are customers able to exchange cryptocurrency in exchange for fiat? Will the platform be able to move virtual assets? The company will have control over the wallets of clients and private keys? Will it manage a trading platform or lend against digital assets?
These differences are important when obtaining a cryptocurrency license to operate in Georgia. The services a business intends to offer will impact its regulatory preparation, documents and controls and capital requirements.
Georgia is an ideal location for fintech firms, but to be able to access its controlled virtual asset market is more than just registering your business and creating a website.
First, define the service
Businesses that offer virtual asset services to third-party clients as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This includes the transfer of virtual assets, exchange, administration of trading platforms and custody or management of cryptocurrency. In addition, the provided regulatory information says the custody concept also extends to the administration of a customer’s private key or wallet.
This means that the design of an crypto-product important to its regulation status.
Anyone who wants to obtain cryptocurrency licenses in Georgia must therefore sketch out the customer journey they intend to take before developing the application. What happens after the client makes a deposit of their funds? Who owns your account? Can assets be traded or transferred? Which person is authorized authorise transactions?
The clarity of the answers can help to clarify what the company will do.
Your Business Plan Has to be able to describe a real-world business
A VASP application requires more than a beautiful pitch deck.
According to the information supplied, the National Bank requires a detailed plan of business with financial projections covering a minimum period of three years. This includes revenue, expense, and expansion expectations. The plan must also indicate that there is a real intention to run in Georgia.
This need should be taken seriously and addressed as early as possible.
A business plan written for investors will address concerns like: How fast can the company grow? The business plan for regulatory compliance should explain how the business is to be run responsibly.
Georgians applying for a VASP license shouldn’t view the commercial model as if they were not connected. Instead they should be able to connect them.
AML cannot be added to the End
PB Services describes the preparation as a series of actions that includes anti-money laundering as well as anti-terrorism financing controls.
The information warns explicitly that importing an AML Policy from another country will not be enough as Georgian regulations must be integrated into the framework of a company.
It is also essential to consider the operational systems. Business plans must show that the company’s system can spot related and suspicious transactions from the outset.
Practically speaking, the conformity of a product has to influence its development prior to being released. Making a platform first, and considering what AML procedures fit later can create unnecessary redesign and create delays.
Capital is dependent on the services you select
The necessity to create a business model early is due to capital required by the regulatory authorities.
As per the thresholds set out in the document of origin Transfer and exchange operations, including kiosks, require 150,000 GEL. The administration of trading platforms requires 350,000 GEL and other covered services require 250,000 GEL. If there are multiple services offered the threshold that is highest applies.
It is not the same as the normal operating capital. Documentation that proves the required amount was actually paid for is required with the application and the capital needs to remain in operation throughout its duration.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration Don’t End the Compliance Work
The calendar of compliance doesn’t end with approval. The guidelines provide ongoing obligations involving cybersecurity, risk management, technological resilience and fraud risk, as well as records retention, independent review, and customer complaints.
For instance, an independent auditor’s opinion regarding the risk-management system must be sought within 12 months of registration. The rules for handling complaints require businesses to accept complaints in oral, written or in electronic format and to examine them within a period of one month, and submit information about complaints electronically to the National Bank each month.
Those details change how serious applicants should approach licensing.
Imagine a Georgian VASP Application as the look of a regulated business.
It is crucial that the structure of the company, technology, AML controls and regulatory capital, as well as the customer’s processes are in sync.
Georgia offers opportunities to crypto and fintech companies, and the legal framework is an easy way to enter the market. The best place to start is to inquire about how fast a license can be issued.
It’s about being able to describe precisely what your cryptocurrency business plans to accomplish and showing that the business is ready to carry out the work within the Georgian legal framework.