The application for regulatory approval should not contain the words “We are in the process of launching a cryptocurrency platform”.
Will customers exchange cryptocurrency for fiat? The platform will be able to transfer virtual assets? Will the company have access to client wallets as well as private keys? Do they plan to manage a trading platform or lend against digital assets?
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 location for fintech firms, but to enter its regulated virtual asset market is more than simply registering a company and creating a site.
First, you must define the service.
Based on the model described by PB Services, businesses providing covered services in the field of virtual assets for third-party clients must be registered as Virtual Asset Service Providers with the National Bank of Georgia.
This covers virtual asset transfer and exchange, administration of trading platforms, as well as management or custody of cryptocurrency. The regulatory information provided states that the concept of custody extends to the administration of the private keys of the client or the wallet.
This makes the design of a cryptocurrency pertinent to its legal status.
Before submitting a license application, a founder who is looking to obtain an e-currency permit in Georgia must map out the customer journey. What happens after a client deposit funds? Who is the person who controls the account? Are assets traded or transferred? Who can authorise transactions?
The clarity of the answers can help to understand what the firm will actually accomplish.
Your Business Plan Must Describe a Real Company
VASP applications need more than just an attractive pitch deck.
According to the information supplied in the report, the National Bank requires a detailed business plan that contains financial projections covering at least three years. These include revenue, expense, and growth expectations. The plan must also indicate an actual intention to be operational within Georgia.
This is a need that must be addressed quickly.
A business model written for investors will answer questions such as how quickly the company can grow. The regulatory business plan should be able to describe how the company will run in a responsible manner.
Georgian applicants seeking a vasp license should not view the commercial model as if it were unrelated. Instead they should join them.
AML is not able to be added at the very end
Anti-Money Laundering and Counter-Terrorism Financing control is one of the major components of the preparation provided by PB Services.
The material warns specifically that the importation of an AML policy from another country will not be enough as Georgian laws must be included into the framework of a company.
It is also essential to take into account the operational system. The business plan needs to be able to demonstrate that the business’s system can identify possible suspicious transactions and the associated activities.
In practice the compliance process should influence the product’s development prior to its launch. It is not advised to design a platform before deciding how AML policies will be applied. This can lead to unnecessary redesigns and delays.
The Services You Select Can Change Your Capital
Regulatory capital is another reason to identify the business model early.
In accordance with the guidelines in the document of origin, exchange and transfer activities, including kiosks, require 150,000 GEL. Administration of the trading platform requires 350,000 GEL and other covered services require 250,000 GEL. If a variety of services are available, the threshold that is most affluent applies.
This is different from regular operating or investment capital. The application must be supported by evidence that the amount requested was financed.
The person who is aspiring to obtain a crypto-blockchain permit in Georgia must therefore consider the regulatory capital in his budgeting process and not wait until the rest is completed.
Registration Doesn’t Finish the Compliance Work
The compliance calendar doesn’t end when you have approval. The guidelines outline 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 framework is one example. It will require an opinion from an independent auditor within 12 months of its registration. The rules for handling complaints oblige businesses to take complaints in oral, written or in electronic format and examine them within a period of one month, and send complaint statistics electronically to the National Bank each month.
These details affect the way serious applicants must approach licensing.
Imagine the Georgian VASP as a visual design for a business, rather than a set of forms to be filled out.
The corporate structure, the service model technology, structure, AML controls, capital regulations processes, risk management, and customer processes need to make sense together.
Georgia is still a great place to start fintech and crypto companies. Its regulatory framework offers an easily-defined route to the market. The best place to start isn’t about how fast a license can be obtained.
It’s describing in clear terms what your cryptocurrency business plans to be doing and proving that the company is prepared to carry out the work within the Georgian regulatory framework.