The regulation application should not include the phrase “We are setting up a platform for cryptocurrency”.
Can customers trade cryptocurrency for fiat? The platform will be able to transfer virtual assets? Will the company control client wallets or private keys? Will it manage the trading platform or lend against digital assets?
These distinctions are crucial when obtaining permission to operate a cryptocurrency in Georgia. The services the business plans to offer determines the preparation of its regulatory documents, controls, and capital requirements.
Georgia offers a market that is regulated for virtual assets that is appealing to fintech companies. However, gaining access to this market requires much more effort than simply registering your business and then launching your site.
First, you must define the service.
Businesses that offer virtual-assets services to third parties are required to become Virtual Asset Service Providers with the National Bank of Georgia under the guidelines laid out by PB Services.
The scope includes the activities of virtual asset exchange and transfer along with management of trading platforms and cryptocurrency management or custody. The regulatory information provided states that the custody concept extends to the management of a client’s private keys or wallet.
This creates the need for cryptocurrency-related products relevant to their regulation status.
Before submitting an application for a license the founder looking to obtain an e-currency license for Georgia must sketch out the customer journey. What happens when a customer makes a deposit of funds? Who controls the wallet? Can assets be traded, or transferred? Which entity is authorized to authorize the transactions?
Answers that are specific and clear will help you determine what the company will be doing.
Your business plan must describe the actual business
VASP applications require more than a pretty pitch deck.
The National Bank will expect a thorough business plan with financial projections over at least three years. This must include the growth, expense and revenue expectations. The plan should also show the genuine intent to operate in Georgia.
This is a need that must be addressed early.
A business plan written for investors will answer questions such as how quickly the company can grow. The business plan for any regulatory activity must contain details on how it will run responsibly.
Businesses that seek vasp Georgia license should be prepared to join to the commercial model as well as the compliance model instead of thinking of the two as distinct documents.
AML cannot be added at the end
PB Services describes the preparation as a set of steps that include anti-money laundering and control of financing for terrorism.
The document warns that importing an AML Policy from a different jurisdiction will not suffice because Georgian rules must be incorporated into the company’s structure.
The operational systems matter also. The business plan needs to demonstrate that the system in place by the company is able to detect related and suspicious transactions right from the beginning.
Compliance needs to be an element in the development of products. It is not recommended to build a platform before deciding how AML policies are to be implemented. This could lead to unneeded redesigns and delays.
The Services You Choose Can affect your capital
Another reason is regulatory capital. to identify the business model in advance.
As per the thresholds listed in the source materials, kiosks and exchange activities need 150 000 GEL. Trading-platform administration is required to be 350,000 GEL, while other covered services need 250,000 GEL. If there are multiple services offered the threshold that’s most affluent applies.
It’s not the exact same as normal operating capital. The evidence that the amount has actually been funded must be included with the application and the capital has 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 isn’t the end of compliance work
The compliance calendar will not disappear with the date of approval. The requirements provided outline ongoing obligations involving cybersecurity, risk management, technological resilience fraud risk, records retention, independent reviews as well as customer complaints.
To obtain an independent audit opinion regarding the framework for risk management companies must register within twelve months. According to the rules, companies are required to take complaints in written or oral form and review them within one month. They must also submit statistics on complaints to the National Bank electronically each month.
These aspects affect the way serious applicants must approach licensing.
Instead of thinking of a Georgian VASP application as a set of forms required to obtain permission to use it, think of it as a design for an authorized business.
The company’s structure, model of service model and the technology used, AML controls as well regulatory capital, risk procedures and customer-facing processes should be coherent.
Georgia is a fantastic place to start fintech and crypto businesses. The framework for regulation provides an established path to market. The best place to start isn’t determining how quickly a license can be obtained.
It is being able, in specific terms, to define what your crypto business will be doing and be able to demonstrate that the business will be operating within the legal framework of Georgia.
