The regulatory application shouldn’t contain the words “We are in the process of launching a cryptocurrency platform”.
Can customers convert cryptocurrency to fiat? The platform will be able to move virtual assets? The company will be in control of wallets for clients or keys? Does it plan to administer a trading platform, or loan against digital assets?
These distinctions are crucial when applying for the crypto-license in Georgia as the type of services a company is planning to provide will affect its regulatory requirements documents, controls, and capital requirements.
Georgia offers a regulated market for virtual assets, which attracts fintech companies. However, getting into this market requires much more effort than simply registering your business and launching a website.
Defining the term “service”
Businesses that provide virtual assets services to third parties under the framework described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
The scope includes the activities of virtual asset exchange and transfer as well as management of trading platforms and cryptocurrency management or custody. Importantly, the supplied regulation states that the custody concept is also applicable to the administration of a customer’s private keys or wallet.
This means that the design of cryptocurrency-related products relevant to their legal status.
An entrepreneur who is interested in obtaining the crypto licence in Georgia should map the customer’s journey prior to creating the application. What happens when a customer transfers their money? Who owns your wallet? Are assets able to be exchanged or transferred? Which party authorizes the transactions?
Specific and clear can help decide what the business is doing.
Your business plan must describe the real-world business
VASP applications also require more than a stunning pitch deck.
According to the supplied information The National Bank expects a detailed business plan with financial projections for at least three years, which includes revenues, expenses, as well as growth assumptions. The plan must also reflect that there is a real intention to run in Georgia.
This is a requirement that needs to be considered early.
A business plan written for investors will answer the following questions: How quickly will the company expand? The plan of business for regulation should also describe how the operation is to be run responsibly.
Georgian applicants seeking a vasp license should not view the commercial model as though it was unrelated. Instead, they should connect them.
AML is not possible to add at the conclusion
PB Services has described the preparation process as a major component of which is the controls to stop money laundering and terrorist financing.
The supplied material specifically warns that simply the import of an AML policy from another country is not sufficient since Georgian requirements need to be incorporated into the business’ framework.
It is also crucial to consider the operational systems. The business plan needs to be able to demonstrate that the business’s system is able to identify any suspicious transactions.
The compliance aspect must be an aspect of product development. In the process of creating a platform and then deciding on how AML can be implemented, you can cause unnecessary delays and even redesign.
Capital Depends on the Services You Choose
The need for regulatory capital is a further reason to determine the business model before.
Under the thresholds provided in the document of origin Exchange and transfer activities such as kiosks, need 150,000 GEL. Administration of the trading platform requires 350,000 GEL while other covered services require 250,000 GEL. The most stringent thresholds apply when a variety of services are offered.
This is different from operating capital or investment capital. Evidence that the required amount is actually funded must accompany the request. Additionally, the capital must be maintained during the entire operation.
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 compliance calendar does not disappear when the calendar is approved. approval. The provided requirements outline continuous obligations pertaining to cybersecurity, risk management technology and risk of fraud, record retention, independent review and complaints from customers.
A risk-management system such as a risk management framework, for instance, must receive an opinion by an independent auditor within a months from the date of registration. The rules for handling complaints require companies to accept complaints in written, oral or in electronic format and to review them within a maximum of a month, and submit information about complaints electronically to the National Bank each month.
These factors can affect the way a serious license applicant approaches licensing.
Instead of thinking of an Georgian VASP application as a collection of forms required for obtaining permission consider it as a design for a regulated business.
The structure of a company’s business, its service model, and technology, AML controls as well the risk management procedures, regulatory capital and customer processes must all be in sync.
Georgia continues to provide opportunities for fintech and crypto businesses. Additionally, its regulation framework gives businesses a clearly defined pathway to the market. The best place to begin is not by asking how fast a license can come through.
It’s being able to explain in clear terms what your cryptocurrency business plans to accomplish and showing that the business is ready to operate within Georgia’s regulatory framework.