“We’re going to launch a cryptocurrency platform” isn’t a precise enough description of a regulatory app.
Are customers able to exchange crypto in exchange for fiat currencies? Will the platform be able to move virtual assets? Can the company manage client wallets or private keys? Are they managing an online asset lending platform that issues tokens or running 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 place to start fintech businesses, however to be able to access its controlled virtual asset market, you need more than registering a company and creating a site.
First, let’s define the service.
Businesses that offer virtual assets services to third parties within the framework outlined in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
In the scope of this are things like virtual asset exchange and transfer along with managing trading platforms and custody or management of cryptocurrency. In addition, the provided regulatory information says the custody concept extends to managing a client’s private keys or wallet.
This makes the design of a crypto product relevant to its regulatory status.
An entrepreneur who is interested in getting a crypto license in Georgia should therefore map the proposed customer journey before developing the application. What happens when the customer makes a deposit of their funds? Who owns the wallet? Can assets be exchanged for or transferred? Who is the person who authorizes a transaction?
The clarity of the answers can help to determine what the company will actually accomplish.
Your Business Plan Must Describe a Real Company
VASP applications also require more than a stunning pitch deck.
Based on the information provided by the National Bank requires a detailed business plan that contains financial projections that cover at least three years. This includes the amount of revenue, expenses, and growth projections. The plan should also show that there is a genuine desire to be a business in Georgia.
This is a requirement that needs to be considered early.
A business model written for investors will answer questions such as how quickly the company will grow. A regulatory business plan must also explain how the operation is to be run in a responsible manner.
Companies that are seeking a vasp Georgia license should be prepared to link to the commercial model as well as the compliance model rather than treating them as separate documents.
AML cannot be added to the End
PB Services describes the preparation as a sequence of steps that cover anti-money laundering, as well as anti-terrorism financing controls.
The document specifically warns against importing policies on AML from another jurisdiction because Georgian regulations need to be integrated into the overall framework of a firm.
The operational systems play a role too. The business plan should demonstrate that the systems of the firm can identify suspicious transactions.
Compliance needs to be a factor in product development. It is not advisable to create a platform prior to deciding on how AML policies will be implemented. This could lead to unneeded redesigns and delays.
Capital is contingent on the services you select
The necessity to create an early business plan is a result of the regulatory capital.
Based on the thresholds set in the documents, kiosks and exchange activities need 150 000 GEL. Platform management for trading requires 350,000 GEL however other covered services require only 250,000 GEL. The maximum threshold applies when multiple services are being offered.
This is distinct from normal capital investment or operating capital. Documentation that proves the required amount was actually paid for must be included with the application and the capital needs to remain in operation throughout its duration.
The founder who wishes to obtain a crypto-blockchain permit in Georgia must therefore consider the regulatory capital when planning his finances prior to the time that the rest has been completed.
Registration is not the end of compliance work
The compliance calendar doesn’t expire with the approval. The supplied requirements describe ongoing obligations involving cybersecurity, risk management technology and risk of fraud, records retention, independent review and complaints from customers.
In order to obtain an independent audit opinion on the framework for risk management companies must register within twelve months. Businesses must also follow the rules set out regarding handling complaints. They must take complaints seriously, whether they’re written, verbal or electronic, and to examine them in a maximum one-month period, and provide figures on complaints submitted electronically to National Bank every month.
These aspects can alter the way that a serious license applicant is approached when it comes to licensing.
Imagine that you are using a Georgian VASP Application as the style of a legally regulated business.
It is important that the company structure along with the technology, AML controls and regulatory capital, in addition to processes for customers, are in harmony.
Georgia is a great place to start businesses in the field of fintech and crypto and the regulatory framework provides a straightforward path to the market. However, asking when you can receive an approval isn’t the best approach to begin.
It’s about being able to describe precisely the things your crypto company will be doing and proving that the business is ready to do it within Georgia’s legal framework.