GeCrypto: how to get a crypto license in Georgia (and corner 20% of the market in six months)

Those heady first days of crypto’s Wild West have ridden off into the sunset as regulatory restrictions tighten everywhere, and Georgia is no exception. Since 2023, companies working with digital assets for the benefit of third parties have had to register with the National Bank of Georgia as a VASP (Virtual Asset Service Provider). Otherwise known simply as a cryptolicense, it guarantees a business’ principled rejection of money laundering and all things illegal.

Despite their introduction a full two years ago, the first cryptolicenses were not issued until the end of 2024. Even international giant ByBit and its venerable team of lawyers had to wait until November 2024 for VASP status in Georgia.

How did GeCrypto beat them to it?

GeCrypto’s ambitious goal

GeCrypto is an offline cryptocurrency exchange located at 5 Marjanishvili Street (where you’ll find all Tbilisi’s most profitable exchanges). The company was founded by enthusiasts with several years of trading experience and an intimate knowledge of the technical aspects of blockchain.

The GeCrypto founders wanted to provide IT professionals paid in crypto, tourists, Web3 fans, and, atypically, large and small businesses alike with official crypto and fiat exchange services for Stablecoins and other popular tokens (like BTC, ETH, and SOL). VASP registration was a must.

Those difficult first steps

Of course, you could put together a package of documents for licensing on your own, but not without multiplying the business start-up period by two. So GeCrypto’s founders started looking for someone to help them leapfrog those first steps, register the company in Georgia, and open a bank account. The whole process can grow from a day to a week. In the end, GeCrypto chose to incorporate as an LLC (but JSC also works for the VASP).

The next step, no less important, entails the gathering of documents. In total, more than 10 documents need to be notarized or apostilled (we cover this list in more detail here). 

The main points:

• National Bank of Georgia requirements call for a specific number of directors (in most cases two) and type of experience, education, and background (a higher education in finance, IT, or related field), with no prior criminal history
• There are also strict requirements for the company’s head office, video surveillance system, and software: representatives of the National Bank of Georgia come out to inspect the infrastructure in person
• Finally, there needs to be a clear business plan, a detailed list of cryptocurrency services provided and, perhaps most importantly, an AML/CTF (Anti-Money Laundering/Counter-Terrorism Financing) policy with clearly defined regulations

The all-important AML/CTF

The business plan and AML/CTF policy proved to be the most challenging task, one requiring special experience and an in-depth understanding of Georgian legislation and the local cryptocurrency market. No one seemed up to the task, and we do not blush to write it: This is when GeCrypto turned to PB Services for help.

The development of GeCrypto’s business plan and AML/CTF policy involved PB’s directors, and subject matter experts were also included in the workflow.

Although requiring an individual approach, the job of drafting a business plan is generally pretty straightforward, and we won’t dwell on it in detail. 

The policy, on the other hand, requires agreement on KYC (Know Your Customer) regulations including basic and in-depth procedures, or CDD (Customer Due Diligence) and EDD (Enhanced Due Diligence). The policy also contains information on monitoring systems, methods of data storage, reporting procedures for suspicious transactions, and many other specific items.

PB Services was also responsible for setting up the AML department, another important National Bank of Georgia requirement for any company applying for VASP status. Basically, you need to prove to the country’s financial services on a regular basis that literally all the regulations listed in the policy work in practice (PB Services supports the work of the AML department even now).

The paperwork took a little longer to finalize

The experts at PB Services wrote the business plan and AML/CTF policy in two months, as originally agreed, and it took another three months to gather all the documents from previous contractors. It was then that GeCrypto applied for registration.

The National Bank of Georgia considers an application within 60 days as a matter of course, but the time needed can grow if it requests additional documents. Such was the case with GeCrypto. In the end, the whole process took about a year from the time the initial documentation was submitted till the license was issued.

GeCrypto received its final VASP status (identification number 405607400) on October 16, 2024, the 18th company to join Georgia’s list of virtual asset service providers (ByBit received its license a few days later). In November, the company began operating.

The VASP license driving business

GeCrypto now serves over 10,000 clients as an official crypto exchange in the capital of Georgia. According to rough estimates, the company has claimed 20% of the domestic crypto exchange market in just six months and is now planning to scale its business in the country’s second largest city, Batumi.

Of course, the VASP license wouldn’t have helped the company a lick if it weren’t for the well-thought-out business strategy, favorable exchange rates, good location, marketing, and flexibility that have equipped GeCrypto to process transactions ranging in size from USD 100 to several million. But the VASP license has made it possible to build relationships with clients based on trust.

For more information about GeCrypto, check out their website.

PB’s work with GeCrypto has been a positive experience, and we continue to assist the founders with other issues, providing a range of back-office services, like HR, accounting, and legal support, as well as the aforementioned AML department support.