It’s not enough precise to describe a legal application like “We’re launching our crypto platform”.
Customers can exchange cryptocurrency in exchange to fiat? Can the platform be used to transfer virtual assets? Will the company control client wallets and private keys? Does it manage the trading platform and lending against digital assets or planning to issue tokens?
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 might provide a favorable business environment for fintech companies but to enter its market for virtual assets now requires more than simply registering a firm and launching a site.
Then, you need to define the service.
Businesses offering virtual assets to third parties must be registered as Virtual Asset Service Providers with the National Bank of Georgia under the framework described by PB Services.
This includes virtual-asset transfer and exchange, management of trading platforms, and the management or custody of cryptocurrency. The important thing to note is that the regulatory information says the custody concept is also applicable to the management of a user’s private keys or wallet.
The technical structure of the product in question is important to its place in relation to regulation.
A business owner who would like to get the crypto license in Georgia should thus map out the proposed customer journey before preparing the application. What happens when a user makes a deposit of funds? Who is the person who controls the wallet? Can assets be exchanged, or transferred? Who is the entity that approves the transaction?
Clarity in the answers helps to establish what the firm will actually do.
The business plan you create must outline an actual business
A VASP application also requires more than a beautiful pitch deck.
The National Bank will expect a comprehensive business plan that includes financial projections for minimum three years. This should include income, expenses and growth estimates. The plan must also indicate the genuine intention to conduct business in Georgia.
This requirement should be addressed early.
A business plan for investors can answer questions like: How quickly can the business grow? The business plan of an operation that is regulated must contain information about how the business will be managed safely.
Georgians who apply for a vasp license should not view the commercial model as if it were unrelated. Instead they should join them.
AML Cannot Be Added at the End
PB Services has described the preparation process as a major element of the measures to prevent terrorist financing and money laundering.
The document specifically warns against importing a law on AML from a different country because Georgian regulations need to be integrated into the framework of a business.
It is also crucial to look at the operational systems. The business plan needs to be able to demonstrate that the business’s system can identify possible suspicious transactions and the associated activities.
Compliance needs to be a consideration in product development. It isn’t a good idea to design a platform before deciding how AML policies are to be implemented. This could lead to delay and unnecessary changes.
The services you select can Impact Your Capital
Knowing the business model as early as possible is crucial for a variety of reasons, such as regulatory capital.
Under the thresholds provided in the source material, exchange and transfer activities such as kiosks, need 150,000 GEL. Platform management for trading requires 350,000 GEL whereas other covered services need only 250,000 GEL. The highest threshold is required for multiple services.
This differs from operating capital or capital invested. A proof that the amount was actually funded must be included with the application and the capital should remain in operation throughout its duration.
A business owner who intends to submit an application for a crypto-blockchain license in Georgia needs to consider regulatory capital at the time of financial planning, and not until the rest of the application is complete.
Registration doesn’t complete the formalization process.
The compliance calendar doesn’t disappear at the moment of approval. It is a requirement that includes ongoing obligations related to cybersecurity, risk management and technological resilience. They also cover the retention of records, independent reviews customers’ complaints, retention of records.
For instance an independent auditor’s report regarding the risk-management system must be sought within 12 months after registration. As per the regulations, companies are required to take complaints in oral or written form and then review them within a month. They also have to transmit statistics about complaints to the National Bank electronically each month.
These details affect how serious applicants should approach licensing.
Think of the Georgian VASP as a design for a company, rather than a set of forms to be filled out.
It is vital that the organization’s structure, technology, AML controls and regulatory capital, along with processes for customers, are in sync.
Georgia is a fantastic place to start fintech and crypto companies. The framework for regulation provides an established path to market. But asking about how quickly you can obtain a license isn’t the best way to begin.
You must be able clearly describe what your business’s crypto-related activities will be and show that you’re prepared to abide by Georgia’s laws.