It’s not precise enough to describe a legal application like “We’re the first to launch our cryptocurrency platform”.
Can users convert cryptocurrency into fiat? Will the platform be able to transfer virtual assets? Will the company control client wallets and private keys? Are they administering an online asset lending platform in the process of distributing tokens or managing a trading platform?
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 has a legal market for virtual assets, which is attractive to fintech companies. However, entering the market requires much more effort than simply registering your business and then launching your website.
First, you must define the service.
Companies 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, the administration of trading platforms and custody or management of cryptocurrency. According to the regulation information, the custody concept includes administration of a customer’s private key and wallet.
The technical structure of the crypto product is crucial to its status in relation to regulation.
Before submitting a license application for a business founder looking to obtain an e-currency licence in Georgia must map out the customer journey. What happens when a user deposits assets? Who controls the account? Are assets able to be traded or transferred? Which party is authorized to authorize transactions?
A clear understanding of the answers is helpful to determine what the company is actually doing.
Your Business Plan Must Describe the real business
VASP applications also require more than just a gorgeous pitch deck.
Based on the information provided, the National Bank requires a detailed plan of business with financial projections covering the minimum of three years. They include expenses, revenue, and expansion expectations. The plan must also indicate an actual intention to operate in Georgia.
This is a problem that must be addressed early.
A business model written to be used by investors addresses concerns like how quickly the company will grow. The business plan that is regulated must explain how the business is to be run responsibly.
Georgians who apply for a vasp licence should not treat the commercial model as though they were not connected. Instead they should link them.
AML Cannot Be Added at the end
PB Services has described the preparation process as a key part of it is the controls against the financing of terrorists and money laundering.
The information warns explicitly that the importation of an AML Policy from another jurisdiction will not suffice because Georgian laws must be included into the company’s structure.
The operational systems matter also. The business plan should show that the system is able to identify possible suspicious transactions and the associated activities.
In practical terms, compliance needs to influence product development before launch. It is not advised to build a platform before making a decision on how AML policies are to be implemented. This can lead to costly redesigns and delays.
Capital Depends on the Services You Choose
Determining the business model at an early stage is important for a number of reasons, including regulatory capital.
Based on the thresholds set in the documents, kiosks and exchange activities need 150 000 GEL. Management of platforms for trading needs 350,000 GEL while other covered services need only 250,000 GEL. If a variety of services are available the threshold that’s highest applies.
This differs from operating capital or capital investment. Evidence that the required amount has actually been funded must be included with the application and the capital needs to be kept in place throughout the operation.
A business owner who intends to submit an application for a crypto-blockchain license in Georgia should consider regulatory capital at the time of financial planning, not until the rest of the application has been completed.
Registration isn’t the end of formalization process.
The compliance calendar doesn’t expire with the approval. The provided requirements detail ongoing obligations in risk management and cybersecurity security, technology resilience, fraud risk as well as record retention, independent review and complaints from customers.
A risk-management system such as a risk management framework, for instance, will require an opinion from an independent auditor within 12 month of registration. Businesses must also follow the guidelines described in handling complaints. They are required to accept complaints, whether they’re written, verbal or electronic, to look over them in a maximum one-month period, and provide statistics on complaints electronically to National Bank every month.
These aspects can alter the way that a serious license applicant approaches licensing.
Consider the Georgian VASP as a visual design for a company rather than a set of forms to fill out.
The corporate structure, the service model technology, structure, AML controls, regulatory capital, risk procedures, and customer processes need to be able to work together.
Georgia continues to present opportunities for fintech and crypto businesses, and its regulatory framework provides a defined route into the market. But the strongest starting point isn’t to ask how fast a license can be obtained.
It’s describing precisely what your company’s crypto operations will be doing and proving that your business is prepared to conduct it within Georgia’s legal framework.