The regulatory application shouldn’t include the phrase “We are creating a cryptocurrency platform”.
Customers can exchange crypto for fiat currency? The platform will allow the transfer of virtual assets? Will the company have access to client wallets and private keys? Is it planning to run an exchange platform or lend against digital assets?
These distinctions are crucial when applying for a crypto-license in Georgia as the type of products and services a business plans to provide will affect its requirements for regulatory compliance documents, controls, and capital requirements.
Georgia has a legal market for virtual assets, which is attractive to fintech firms. However, gaining access to this market is more work than just registering your business and then launching your site.
Then, you need to define the service.
Businesses that provide 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.
This covers virtual asset transfer and exchange, the administration of trading platforms, and management or custody of cryptocurrency. According to the information provided by the regulator the concept of custody encompasses management of a client’s personal key and wallet.
The technical specifications of the product in question is relevant to its position in relation to regulation.
Before submitting an application for a license the founder looking to obtain an e-currency permit in Georgia must map out the customer’s journey. What happens when the customer deposits their assets? Who controls your wallet? Can assets be transferred or exchanged? Who is the entity that authorizes a transaction?
It is important to know what the firm will be doing.
Your Business Plan Must be able to describe a real-world business
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 at least three years. This should include income, expenses and growth assumptions. The plan should also show a genuine intention to operate in Georgia.
It is vital to address this issue as soon as you can.
Investors may ask questions such as how quickly the business will grow. The business plan of any regulatory activity must include information on how it will run safely.
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 is not able to be added at the very end
The Anti-Money Laundering as well as the Counter-Terrorism Financing control is one of the major components of the preparation described by PB Services.
The document specifically states that simply importing an AML policy from a different jurisdiction is insufficient because Georgian rules must be integrated into the firm’s framework.
Also, the operating systems are essential. The business plan should demonstrate that the system used by the firm can identify suspicious transactions or those that may be related to them.
The compliance aspect must be a factor in product development. First, establishing a platform and seeking out what AML procedures can be integrated later could lead to unnecessary changes and lead to delays.
Capital is contingent on the Services You Select
The business model should be determined as early as possible is essential for a variety of reasons, such as regulatory capital.
Based on the thresholds set forth in the source materials for transfers and exchange, which includes kiosks, they must have at minimum 150,000 GEL. Management of a trading platform for trading needs 350,000 GEL and other covered services require 250,000 GEL. If several services are offered the threshold that’s the highest is used.
This is separate from ordinary operating or investment capital. Documentation that proves the required amount was actually paid for is required with the application and the capital should be maintained throughout the course of operations.
The person who is aspiring to apply for a crypto-blockchain licence in Georgia should consider the regulatory capital when calculating his financial plan before the rest has been completed.
Registration Doesn’t Finish the Compliance Work
Approval isn’t the time when the compliance calendar disappears. The guidelines outline continuing obligations in risk management and cybersecurity security, technology resilience fraud risk and records retention, independent review and customer complaints.
For example an opinion of an independent auditor on the risk-management framework must be sought within 12 months of the date of registration. As per the regulations, companies must take complaints in written or oral form and review them within one month. They are also required to submit statistics on complaints to the National Bank electronically each month.
Those details change how an experienced applicant approaches licensing.
Instead of thinking of an Georgian VASP application as a collection of forms required for obtaining permission to use it, think of it as the style of an regulated business.
The structure of a company’s business, its service model, and technology, AML controls as well the risk management procedures, regulatory capital and customer procedures must be consistent.
Georgia is continuing to provide opportunities for fintech and crypto companies, and its regulatory framework is a well-defined route into the market. However, asking when you can receive an authorization isn’t necessarily the most effective way to start.
It is essential to explain in detail how your crypto-business’s goals are, and demonstrate that you’re able to adhere to Georgia’s rules.
