The application for regulatory approval should not contain the words “We are setting up a platform for cryptocurrency”.
Are customers able to convert cryptocurrency into fiat? Can the platform allow the transfer of virtual assets? Do they have access to client wallets as well as private keys? Is it planning to run a trading platform or lend against digital assets?
Those differences matter when pursuing a crypto license in Georgia due to the services that a company intends to provide influence its regulatory preparation, documentation, controls, and capital requirements.
Georgia has a legal market for virtual assets that is attractive to fintech companies. However, gaining access to this market takes more effort than simply registering your business and launching your website.
Definition of the nature of service
Businesses that offer virtual-assets services to third parties must sign up as Virtual Asset Service Providers with the National Bank of Georgia under the structure described by PB Services.
This covers virtual asset transfer and exchange, administration of trading platforms, as well as the management or custody of cryptocurrency. The information on regulation states that the custody concept extends to the administration of the clients’ private keys or wallet.
The technical design of a crypto-product important to its position in the regulatory system.
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 manages your wallet? Can assets be exchanged for or transferred? Which party is authorized to authorise transactions?
Clear answers help establish the exact nature of what the business will be doing.
Your Business Plan must describe a real business
VASP applications need more than just an appealing pitch deck.
The National Bank will expect a comprehensive business plan that includes financial projections for at least three years. This should include revenues, expenses and growth projections. The plan must also indicate the genuine intent to operate in Georgia.
It is essential to deal with this issue as quickly as possible.
A business plan designed for investors will answer the following questions: How quickly can the business grow? The plan of business for regulation should explain how the business will run in a responsible manner.
Companies that are seeking vasp Georgia license must be prepared to connect the commercial model with the compliance model rather than considering the two documents as separate documents.
AML is not able to be added at the end
The Anti-Money Laundering as well as the Counter-Terrorism Controls for financing are among the main components of the process as described by PB Services.
The material provided specifically warns that simply taking an AML policy from another country is not enough since Georgian laws must be integrated into the company’s structure.
The operational systems are important too. The business plan must be able to demonstrate that the business’s system is able to identify potentially suspicious and related transactions.
In the real world, compliance needs to influence the development of products prior to launching. Building a platform first and looking into how AML procedures fit later will result in unnecessary redesigns and create delays.
Capital Depends on the Services You Select
Capital for regulatory purposes is another reason to define the business model early.
As per the thresholds set out in the sources Transfer and exchange operations which include kiosks, are required to be 150,000 GEL. Administration of the trading platform is required to be 350,000 GEL and other covered services need 250,000 GEL. The maximum threshold applies when a variety of services are offered.
This is separate from ordinary capital used for investment or operational purposes. The application should be accompanied by proof that the required amount has been financed.
The founder who wishes to get a crypto-blockchain license in Georgia must therefore consider the capital required by Georgia’s regulatory authorities in his budgeting and not wait until the rest has been completed.
Registration Doesn’t Finish the Compliance Work
The compliance calendar does not end when you have approval. The required requirements outline regular obligations related to risk management and cybersecurity security, technology resilience and fraud risk, as well as records retention, independent review and complaints from customers.
For example an independent auditor’s report regarding the risk-management system must be sought within 12 months of the date of registration. The described complaint-handling rules also stipulate that businesses must accept complaints in written, oral or electronic formats, analyze them within a maximum of a month, and provide details of complaints electronically to National Bank each month.
These details can change the way in which a serious applicant approach licensing.
Instead of thinking of the Georgian VASP application as a set of documents required for obtaining permission consider it as the style of a 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 in sync.
Georgia continues to provide opportunities for crypto and fintech companies. Its regulatory framework offers a clear route into the market. But asking about how quickly you can apply for an authorization isn’t necessarily the most effective way to start.
It’s being able, specifically, to describe what your crypto business will be doing and prove that your company is operating in accordance with the Georgian legal framework.