“We’re going to launch a cryptocurrency platform” isn’t an accurate enough description of a regulation application.
Are customers able to convert cryptocurrency into fiat? Does the platform transfer virtual assets? Does the company have control over client wallets or private keys? Do they plan to manage a trading platform, or loan against digital assets?
These differences are important when applying for a crypto-license in Georgia, because the services that a company plans to provide will impact its regulatory requirements documents, controls, and capital requirements.
Georgia might provide a favorable setting for fintech companies, but entering its regulated virtual-asset market today requires more than just registering a business and creating a web site.
First, define the Service.
Businesses that offer virtual asset services to third party within the framework outlined in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
Included in the scope are things like virtual transfer and exchange of assets along with 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 the administration of a customer’s private wallet or key.
This makes the design of a product in the crypto space relevant to its regulatory status.
Before submitting an application for a license for a business founder looking to obtain an e-currency licence in Georgia must sketch out the customer journey. What happens when a customer makes a deposit of their funds? Who controls the account? Are assets able to be traded or transferred? Who is the one who is able to authorize a transaction?
Clear answers help establish what the firm will be doing.
Your Business Plan Needs to Describe the Real Business
VASP applications require more than a pretty pitch deck.
Based on the information given by the National Bank requires a detailed plan of business that contains financial projections for at least three years. They include income, expense, as well as the growth forecast. The plan should also show a real intent to operate within Georgia.
It is essential to deal with this issue as soon as it is possible.
Investors are able to ask questions about how fast the business will expand. A business plan that is regulated must also explain how the operation will operate in a safe manner.
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 to the end
PB Services has described the preparation process as a key part of which are the controls to stop financial crime and the financing of terrorists.
The document specifically warns against importing policies regarding AML from a different country because Georgian laws must be integrated into the framework of a firm.
Additionally, the operational systems are crucial. Business plans must show that the system in place by the company can detect similar and suspicious transactions from the outset.
Practically speaking, the conformity of a platform must affect the development of the product before it can be launched. Making a platform first, and looking into how AML procedures fit later will result in unnecessary redesigns and lead to delays.
Capital is contingent upon the Services you Choose
Establishing the business’s model at an early stage is important for a number of reasons, including the requirement for capital.
Based on the thresholds set in the materials used for the source, kiosks as well as exchange activities require 150 000 GEL. Platform management for trading requires 350,000 GEL however other covered services are only required to be 250,000 GEL. If a variety of services are available the threshold that is most applicable is the one that is.
This is distinct from operating capital or capital for investment. Documentation that proves the required amount is actually financed must be included with the application and the capital must remain in operation throughout its duration.
The person who is aspiring to apply for a crypto-blockchain licence in Georgia should consider the capital required by Georgia’s regulatory authorities in his budgeting prior to the time that the rest is completed.
Registration doesn’t end the task of ensuring compliance.
The compliance calendar doesn’t end with approval. These requirements cover continuous obligations pertaining to cybersecurity, risk management and technological resilience. They also include record retention, independent reviews, customer complaints, and records retention.
For example an independent auditor’s view on the risk management framework should be obtained within 12 months of the date of registration. In accordance with the regulations, companies must take complaints written or verbally and must review them within one month. They also have to transmit statistics about complaints to the National Bank electronically each month.
These aspects can alter the way an experienced license applicant is approached when it comes to licensing.
Imagine a Georgian VASP Application as the look of a unregulated business.
A company’s structure, service model, and technology, AML controls as well processes for regulating capital, risk and customer service processes have to be coherent.
Georgia is a good location for crypto and fintech companies. The framework for regulation provides a well-defined path to the market. The best place to start isn’t determining how quickly an approval can be obtained.
It is being able, in a specific manner, to detail what your crypto company plans to do and to prove that your company is operating within Georgia’s legal framework.