It’s not enough precise to describe a regulation application as “We’re launching our crypto platform”.
Can customers exchange crypto for fiat currency? Will the platform transfer virtual assets? The company will have control over the wallets of clients as well as private keys? Does it manage an online trading platform or crediting against digital assets, or is it planning to issue tokens?
The differences in these two areas are crucial when you seek a crypto license in Georgia due to the services that a business plans to offer affect its regulatory preparation, documentation, controls, and capital requirements.
Georgia could be a desirable business environment for fintech companies however, gaining access to its controlled virtual-asset market now requires much more than simply registering a firm and creating a web site.
First, let’s define the service.
Companies that offer virtual assets services to third parties as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Included in the scope are activities like virtual asset exchange and transfer and trading platform administration and custody or management of cryptocurrency. The regulation’s information states that the concept of custody extends to the management of a private keys of the client or the wallet.
This means that the design of an crypto-product important to its legal status.
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 customer deposit their money? Who is the person who controls the wallet? Assets can they be exchanged or transferred? Which entity is authorized to authorize transactions?
A clear understanding of the answers is helpful to determine what the company will actually do.
Your Business Plan must describe the Real Business
VASP applications need more than just an attractive pitch deck.
The National Bank will expect a detailed business proposal that includes financial projections over at least three years. The plan should contain income, expenses and growth projections. The plan must also indicate an actual intention to be operational within Georgia.
This is a need that needs to be addressed early.
Investors are able to ask questions about how quickly the business will expand. The plan of business for regulation should include a description of how the business will be managed responsibly.
Georgian applicants for a vasp licence should not treat the commercial model as though it was unrelated. Instead they should be able to connect them.
AML cannot be added at the very end
PB Services describes the preparation as a series of actions that include anti-money laundering and counter-terrorism controls.
The supplied material specifically warns that just import of an AML policy from another country is not sufficient since Georgian rules must be integrated into the company’s structure.
The operational systems play a role as well. The business plan must demonstrate that the system in place by the company can identify related and potentially suspicious transactions from the start.
Practically speaking, the conformity of a product must influence its design before it’s launched. The process of creating a platform before seeking out what AML procedures will fit afterward can create unnecessary redesign and delay.
Capital is Dependent on the Services you select
The need to establish the business model in time is due to capital required by the regulatory authorities.
Based on the criteria set out in the source material, transfer and exchange, as well as kiosks, they must have at the minimum of 150,000 GEL. Administration of trading platforms requires 350,000 GEL and other services need 250,000 GEL. When multiple services are provided the most appropriate threshold is the one to be used.
This is different from normal operating capital or capital invested. The application must be accompanied by proof of the amount required has been financed.
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.
The registration process is not the end of the compliance process.
Approval is not the point where the compliance calendar ceases to exist. The guidelines provide regular obligations that involve risk management, cybersecurity technological resilience, fraud risk, recording retention, independent review and complaints from customers.
For example an independent auditor’s report regarding the risk-management framework has to be obtained within 12 months after registration. The rules state that businesses are required to accept complaints in oral or written form and examine them within a month. Additionally, they must submit statistics on complaints to the National Bank electronically each month.
These particulars can alter the way an experienced license applicant takes licensing.
Think of the Georgian VASP as a visual design for a business, rather than a set of forms that must be filled out.
The company structure, service model and technology AML controls, capital regulations processes, risk management, and customer processes need to be able to work together.
Georgia remains a wonderful location for crypto and fintech companies. The regulatory framework it has provides an easy path to market. However, asking when you can get an authorization isn’t necessarily the best approach to begin.
It’s describing precisely what your crypto business will perform and showing that the business is ready to conduct it within the Georgian regulatory framework.