The application for regulatory approval should not include the statement “We are creating a cryptocurrency platform”.
Can customers exchange crypto for fiat currency? The platform will allow virtual assets to be transferred? Will the company control client wallets or private keys? Do they plan to manage the trading platform or lend against digital assets?
These differences are important when obtaining permission to operate a cryptocurrency to operate in Georgia. The services an organization plans to offer influences its preparation for regulatory documents, controls, and capital requirements.
Georgia provides a well-regulated market for virtual assets that is attractive to fintech firms. However, entering this market is more difficult than just registering your business and then launching your site.
First, you must define the service.
Businesses offering virtual asset services to third-party clients according to the model described in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
The scope includes things like virtual asset exchange and transfer and trading platform administration and the management of crypto assets or custody. Importantly, the supplied legal information states that the concept of custody also applies to managing a client’s private key or wallet.
This makes the design of cryptocurrency-related products relevant to their legal status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when a customer deposit funds? Who controls the account? Can assets be exchanged for or transferred? Which party authorizes transactions?
A clear understanding of the answers is helpful to establish what the firm is actually doing.
Your Business Plan Must Describe the real business
VASP applications also require more than a beautiful pitch deck.
According to the supplied information The National Bank expects a detailed business plan with financial projections of at least 3 years, including costs, revenues, and growth expectations. The plan must also prove the intention to operate within Georgia.
This is an issue that deserves to be addressed in the earliest possible time.
A business plan written for investors answers questions like how fast the business can expand. The business plan that is regulated must be able to describe how the company will operate responsibly.
For companies that are looking for a license to use vasp Georgia applicants should be prepared to connect the commercial model with the compliance model instead of thinking of them as separate documents.
AML Does not qualify for inclusion in the end
PB Services has described the preparation process as a major part of it is the controls to stop the financing of terrorists and money laundering.
The material is specifically cautioned against simply importing a policy regarding AML from a different jurisdiction, as Georgian laws must be integrated into the structure of the company.
It is also essential to think about the operational systems. The business plan should be able to demonstrate that the business’s system can identify any suspicious transactions.
Practically speaking, the conformity of a product must influence its development prior to being released. The process of creating a platform before considering how AML procedures will fit afterward could lead to unnecessary changes and cause delays.
The services you select can Change Your Capital
Capital for regulatory purposes is another reason to identify the business model before.
According to the requirements in the source materials for exchange and transfer, including kiosks must be at minimum 150,000 GEL. The administration of trading platforms is required to be 350,000 GEL while other covered services require 250,000 GEL. The most stringent thresholds apply for multiple services.
This is different from operating capital or capital for investment. The proof that the amount requested is actually financed must accompany the request, and the capital should be kept during the entire operation.
A founder who is planning to apply for a crypto-blockchain license in Georgia should consider regulatory capital prior to the start of financial planning but not once the rest of the application has been submitted.
Registration isn’t the only aspect of compliance work
Approval is not the point when the compliance calendar ceases to exist. The guidelines provide ongoing obligations involving risk management, cybersecurity technology fraud risk, record retention, independent review and complaints from customers.
A framework for risk management For instance, a risk-management framework is required to receive an opinion from an independent auditor within a month of registration. The rules state that businesses are required to accept complaints written or verbally and must review them within one month. Additionally, they must submit statistics on complaints to the National Bank electronically each month.
These factors can affect the way a serious license applicant approaches licensing.
Imagine that you are using a Georgian VASP Application to represent the layout of a controlled business.
The structure of a company’s business, its service model, and technological capabilities, AML controls as well regulatory capital, risk procedures and customer service processes have to be coherent.
Georgia is a good place to start fintech and crypto businesses. Its regulatory framework offers an easy path to market. The best way to begin is not by asking what speed a license is going to be issued.
It’s being able, in specific terms, to detail what your crypto company will be doing and show that your business will be operating within the Georgian legal framework.