Getting a Georgia VASP license

As one of the main centers of cryptocurrency activity in Eastern Europe in recent years, Georgia provides a supportive legislative and economic framework for the advancement of blockchain technology and cryptocurrencies. Many investors and entrepreneurs are drawn to the nation in search of opportunities to investigate and take advantage of blockchain technology and cryptocurrencies. This fascination in cryptocurrencies is a reflection of a worldwide trend in which tokens and digital currencies are growing in importance as tools in the financial system.

Alongside the development of the crypto sphere in Georgia, a number of companies offering services related to virtual assets have also emerged. These companies include wallets, exchanges, ICO portals, and other enterprises. These businesses stimulate the growth of financial technology, bring in international investment, and generate new employment, all of which have a substantial favorable influence on the regional economy. To maintain security, equity, and participant protection, the cryptocurrency market's expansion calls for regulation and supervision.

Definition of VASP (Virtual Asset Service Provider)

Before we get into our article's topic analysis, let's clarify what VASP is.

An organization known as VASP offers solutions utilizing digital assets like tokenized money and cryptocurrencies. These services include keeping and holding virtual currencies, transferring them, exchanging them for fiat currency, and providing financial services for their sale.

Objectives and aims of the VASP certificate

VASP licenses are issued by regulatory agencies to guarantee the transparent, reliable, and safe provision of virtual asset-related services. This procedural approach's primary goal is to offer a safe, regulated environment for dealing with cryptocurrencies and other digital assets. This is essential to preventing financial illegal activities such as money laundering and funding terrorism as well as safeguarding user interests.

Any business in Georgia looking to participate in tokenized operations has to apply for a VASP permit. This shows that the organization conforms with the standards of national law. By following tight KYC and AML protocols to thwart criminal activity and authenticate customers, the company's operations are now legitimate, and its relationships with clients and business partners are strengthened.

In order to control virtual currencies and associated services, the Georgian government is actively creating and approving legislative measures. These regulations seek to specify the legal standing of blockchain technology and decentralized financial systems, as well as to create certain standards for VASPs.

In this respect, the National Bank of Georgia plays an important role in regulating and overseeing VASPs, as well as developing laws and AML/CFT directives.

As a result, the VASP license is critical to the progressive and responsible growth of Georgia's crypto sector. It not only allows companies to expand their activities, but it also helps to promote a positive public picture of the crypto segment on a local and international scale.

VASP certificates in Georgia allow for the following activities:

Corporations in Georgia that use cryptocurrency might benefit significantly from acquiring a VASP license. The following are the primary areas of action available with this permission:

• Trading digital currency for fiat money

An essential service offered by authorized VASPs in Georgia is the conversion of cryptocurrencies into fiat money, including dollars, euros, and Georgian lari, and vice versa. This service serves as an essential transitional bridge by establishing the link that is required between the crypto market and the established financial structure. Companies must put in place efficient AML/KYC verification systems in order to offer these services. They enable precise user identification and transaction tracking in order to stop financial wrongdoing.

• Transmission of digital assets

Users can move cryptocurrencies and other digital assets between accounts on the same site or between platforms using this kind of service. The platform facilitates token exchanges between different tokens as well as internal cryptocurrency transactions. In order to avoid money laundering, licensed digital asset operators in Georgia must guarantee the security of these transactions, offer transparency, and adhere to all applicable legal requirements.

• Portfolio management for digital assets

In addition to building and managing digital asset portfolios that suit each client's unique aims and preferences, portfolio management services include giving customers expert guidance about cryptocurrency investments. Businesses who provide these services have to show that they have a great deal of experience with cryptocurrencies and know how to evaluate the risks that come with market volatility.

• Lending of virtual assets

This kind of business is lending out bitcoin or accepting cryptocurrency as security. This may present consumers and investors with new financial prospects. Providers must develop clear lending terms, including collateral terms, interest rates, and repayment procedures, while ensuring compliance with all regulatory standards.

Organization and implementation of Initial Coin Offering (ICO)

ICOs allow businesses recognized as VASPs in Georgia to raise capital by exchanging investment cash for new tokens or cryptocurrencies. With the help of this cutting-edge financing technique, businesses and other ventures may swiftly acquire capital and have access to worldwide financial resources. An organization that wants to hold an ICO must provide investors with comprehensive information about the project, including its objectives, technology foundation, terms for using the cash raised, and any dangers. Additionally, it is critical to adhere to the standards of honesty and openness in order to prevent charges of deceiving prospective investors or committing fraud.

Legal requirements in Georgia for acquiring a VASP license

In order to be eligible for a VASP license, businesses need to fulfill several requirements that guarantee their integrity and dependability.

Establishing a business under the framework of a limited liability company (LLC) or joint-stock company (JSC) is the main condition for receiving a Georgian VASP license. This need guarantees the business's financial accountability and legal transparency, hence requiring a well-organized management structure and foundational papers outlining rights, duties, and control systems.

When reviewing applications to get certified as a VASP in Georgia, supervising bodies closely examine the data that the business submits. Regulators' primary attention now centers on these criteria:

• Legitimate purity. The company's and its leaders' background is being looked at for convictions, particularly for economic crimes encompassing money laundering, tax evasion, fraud, and other infractions that include the use of illegal ways to earn money. Analysis is also being done on information on the company's and its founders' prior bankruptcy proceedings.
• Financial stability. To determine if a company can guarantee steady and dependable operations, a financial statement study of the company is being done. Assuring the company has enough cash to launch and continue operations while reducing risks to clients and business partners is the main goal, with an emphasis on registered capital size verification and financial integrity analysis. A critical assessment of the company's resilience to financial shocks and its capacity to meet customer demands is crucial.
• Adherence to AML/KYC regulations. The organization's efforts to reduce the likelihood of funding terrorism and laundering illicit cash are the main emphasis. Analyzing the organization's aptitude for customer recognition, financial transaction monitoring, and suspicious situation response are all part of the evaluation. This necessitates the creation, application, and upkeep of suitable internal policies, processes, and transaction monitoring systems by the business.

In order to audit a company's legal transparency and economic stability, a variety of documents must be provided. These documents include the company's founding documents, financial statements, an explanation of its internal control procedures, AML/KYC directives, and biographies and certifications of the professional suitability of its key employees. All of this is intended to foster an environment where Georgia's digital currency market enjoys top degrees of security and confidence.

VASP certification procedure in Georgia

Acquiring a VASP license in Georgia is a rigorous procedure that requires thorough preparation and attention to each stage. The following are the major processes that must be fulfilled for a successful license acquisition.

Formal business registration

In order to receive a VASP license in Georgia, you must first establish your company as a legal organization in one of the approved legal forms, such as an LLC or JSC.

Assembling the necessary paperwork

The next step is to have everything ready and gathered so that it can be submitted to the National Bank of Georgia. Typically, the list of papers includes:

• The enterprise's certificate of incorporation and its governing documents.
• An extensive explanation of the services rendered.
• A business plan that encompasses financial indicator estimates and a development idea.
• Elaborated AML/KYC guidelines and protocols.
• Evidence of the business's and its owners' financial and legal stability.

Filling out an application and sending it to Georgia's National Bank

Once all the paperwork is finished, a VASP license application must be sent to the National Bank of Georgia. This application must include all the prepared paperwork as well as a thorough explanation of the company operations.

Examination and issuance of license application

The application is reviewed by the National Bank of Georgia as the last step. Additional data or paperwork could be needed during this time. Accurate and timely responses to the regulator's inquiries are essential. You will receive a VASP permit, enabling you to do bitcoin commerce in Georgia, when the analysis is successfully completed.

The regulator can suggest modifying your company's AML/KYC policy, business plan, or other operational issues. In this situation, the relevant adjustments must be made and duly documented. It is advised to seek expert advice in order to make the required adjustments.

In some circumstances, Georgia may provide a VASP license subject to restrictions or requirements. You must thoroughly review these terms and make sure that everything you do complies with them. If you break the licensing terms, it could be revoked.

Georgia's tax regulations for crypto enterprises

Given that it offers significant tax incentives to companies in the field that have been granted licensed VASP status, Georgia is among the most tempting places for crypto investments. The primary tax benefits are comprehensively outlined below:

• Corporate tax. Profits earned by companies in Georgia are subject to a 15% tax rate, which is much lower than in many other nations and draws in foreign businesses. Because profit tax is only applied in cases of revenue distribution, businesses may more wisely use their cash for expansion and development without having to worry about being immediately taxed.
• VAT. In Georgia, operations with cryptocurrencies are exempt from VAT, which makes the VAT rate equal to 0%. This exemption from taxation makes transactions with cryptocurrencies more advantageous and contributes to increasing the competitiveness of enterprises operating in this field.
• Exemption from dividend taxes. Complete exemption from dividend tax is offered in Georgia under specific circumstances, allowing capital investors and crypto angels to maximize their returns on cryptocurrency investments. This implies that dividend distributions will not be subject to tax withholding, resulting in more chances for profit retention and reinvestment.

These tax breaks and benefits foster the best conditions for the growth of cryptocurrency initiatives and draw international contributions to Georgia. They also give businesses recognized as VASPs in Georgia opportunities to reduce their tax liabilities, foster the creation of creative solutions, and advance the nation's economy as a whole.

Benefits associated with earning a Georgia VASP license

• Ensuring the safety and legality of cryptocurrency projects for all stakeholders.

In Georgia, securing a VASP license ensures the safety and legal integrity of crypto transactions. Companies' positions with regulatory bodies, monetary institutions, and other partners are strengthened by this clarity, which provides them with a clear grasp of their legitimate responsibilities. In addition to fostering consistency in internal operations, this legal certainty protects businesses from any legal problems resulting from legislative changes and establishes them as genuine players in the virtual asset market.

• Contribution to foster trust between investors and clients

A VASP permit in Georgia is a useful tool for contributors and users to build solid, trustworthy relationships, which is essential in circumstances where trust is the primary factor determining success. Because these businesses have undergone extensive inspection and uphold strict standards of security, transparency, and financial stability, partners and clients typically favor licensed platforms. This assurance encourages the usage and adoption of bitcoin services on a larger scale, which expands the clientele and draws in investment.

• Benefits in the worldwide market and the capacity to draw in foreign clientele

The ability of a business to conduct business internationally becomes crucial to its expansion and success in the age of globalization and online shopping. An organization's adherence to global norms for the control of cryptocurrency activities is demonstrated by its Georgia VASP license. By doing this, it not only improves its standing internationally but also gives potential overseas clients and partners who want to work with it more confidence. Given the global nature and absence of territorial restrictions of cryptocurrencies and blockchain, the license authorization enables businesses to lawfully perform cross-border transactions, which is critical for business models based on these technologies.

Conclusion

It is impossible to exaggerate the relevance of a VASP license to cryptocurrency companies operating successfully in Georgia. This certificate attests to the business' compliance to the strict guidelines and criteria set out by the nation. It is more than simply a formality, it is essential to seize fresh chances in the quickly expanding crypto market. When a business gets this kind of approval, it shows that it is dedicated to security, openness, and creating reliable connections. These attributes are highly prized by contributors and consumers alike in the digital money industry.

It is essential to have a trustworthy partner with professional credentials and significant knowledge in cryptocurrency regulation in order to effectively complete the licensing procedure and prevent any issues. As such a partner, TK Deal offers complete guidance throughout the process of acquiring a VASP license in Georgia. Our job is to assist our clients in navigating the regulatory landscape so that every part of their business is compliant with Georgian laws. With our help, you can concentrate on the expansion and improvement of your bitcoin business, safe in the knowledge that all legislative requirements are met.