The regulation application should not contain the words “We are creating a cryptocurrency platform”.
Customers can exchange crypto for fiat currencies? Will the platform allow virtual assets to be transferred? The company will be in control of client wallets or keys? Is it planning to run the trading platform or lend against digital assets?
These differences are important when obtaining permission to operate a cryptocurrency to operate in Georgia. The type of service an organization plans to offer determines the preparation of its regulatory documents controls, as well as capital requirements.
Georgia offers a market that is regulated for virtual assets that is attractive to fintech companies. However, getting into this market is more difficult than simply registering your company and then launching your website.
First, Define the Service
Businesses that offer virtual-assets services to third parties must be registered as Virtual Asset Service Providers with the National Bank of Georgia under the guidelines laid out by PB Services.
The scope covers activities such as virtual-asset exchange and transfer, management of platforms for trading and custody of cryptocurrency management. The information on regulation states that the custody concept stretches to the management of the clients’ private keys or wallet.
The technical design of a cryptocurrency relevant to its regulatory position.
An entrepreneur who is interested in obtaining the crypto licence in Georgia should sketch out the customer’s journey before creating the request. What happens after the client deposit their money? Who owns the wallet? Are assets able to be traded or transferred? Who is the one who is able to authorize a transaction?
It is important to be clear in your answers to clarify what the company will actually do.
Your Business Plan Needs to Describe a Real Company
A VASP application also requires more than an attractive pitch deck.
The National Bank will expect a complete business plan that contains financial projections over minimum three years. It should include revenues, expenses and growth assumptions. The plan must also prove an actual intention to be a business in Georgia.
This is a requirement that needs to be considered early.
A business plan written for investors will address questions such as: How fast can the business grow? The business plan of the regulatory process must contain details on how it will be run responsibly.
For companies seeking a vasp license Georgia applicants should be prepared to connect the commercial model with the compliance model rather than treating them as unrelated documents.
AML cannot be added at the End
Anti-Money Laundering and Counter-Terrorism Controls for financing are among the most important components of the procedure as described by PB Services.
The supplied material specifically warns that simply the import of an AML policy from a different jurisdiction is not sufficient since Georgian regulations must be integrated into the company’s framework.
The operational systems are important as well. The business plan must prove that the company’s system is able to identify possible suspicious transactions and the associated activities.
In practice AML compliance must influence the product’s development prior to its launch. First, establishing a platform and considering what AML procedures fit in the future could result in unnecessary rework and create delays.
Capital is contingent upon the Services you select
The necessity of establishing a business model early is due to capital required by the regulatory authorities.
Based on the guidelines in the source material for transfers and exchange, which includes kiosks must be at minimum 150,000 GEL. Trading platform administration is required to be 350,000 GEL in addition to other covered services require 250,000 GEL. If multiple services are being offered the most relevant threshold is the one to be used.
This is distinct from operating capital or capital investment. A proof that the amount is actually financed must be included with the application and the capital must be maintained throughout operations.
A founder who is planning to apply for a crypto blockchain license in Georgia needs to consider regulatory capital at the time of financial planning, but not until after the remainder of the application is completed.
Registration isn’t the end of task of ensuring compliance.
The compliance calendar will not disappear with the date of approval. It is a requirement that includes regular obligations relating to risk management, cybersecurity and technological resilience. They also cover records retention, independent reviews of customer complaints and record retention.
In order to receive an audit-free opinion from an independent source on the framework for risk management the company must be registered within twelve months. As per the regulations, companies are required to take complaints in oral or written form and must review them within one month. They also have to transmit statistics about complaints to the National Bank electronically each month.
These factors affect the way serious applicants should approach licensing.
Imagine an Georgian VASP Application as the look of a unregulated business.
A company’s structure, business model, and technological capabilities, AML controls as well regulatory capital, risk procedures and customer-facing processes should be in sync.
Georgia is a good location for crypto and fintech companies. The regulatory framework it has provides a well-defined path to the market. But the most effective starting point isn’t determining how quickly the license will be granted.
It’s being able, with specificity, define what your crypto business plans to do and to demonstrate that the company will be operating within the Georgian legal framework.
