Virtual Asset Service Provider (VASP) registration procedure and the relevant requirements are now public.
The president of the National Bank of Georgia (NBG) has finally issued the long-awaited legislative act. The act regulates VASPs’ procedures for registration and de-registration. The legal act puts forth a list of the VASP requirements that a candidate shall meet. The legislation aims to ensure transparency and accountability with regard to anti-money laundering and counter-terrorism financing regulations.
Most of the provisions set forth by the Order of the NBG President do not apply to the representatives of the financial sector that have the permission to provide virtual asset services.
Who Can Be a Virtual Asset Service Provider?
As the order establishes, a VASP can only be a Georgian-incorporated and registered entity. More precisely, it must be either a limited liability company (LLC) or a joint stock company (JSC).
Additionally, the order once again lays down the definitions of virtual assets/convertible virtual assets and related services. It further specifies that the VASP shall not carry out the services through an agent. An “agent” is a person that conducts activities related to virtual assets on behalf of a VASP.
What Services Can a Registered VASP Provide?
With regard to the services, the new order sets out that the registered VASP can transfer convertible virtual assets. The services also allow exchanging between convertible virtual assets, fiat currencies, financial instruments, and so on.
Moreover, the law provides that:
- It is generally prohibited to transfer virtual assets to a natural person as a loan.
- A VASP can generate commission/interest/profit with the virtual asset of service within the scope of its activities.
- A VASP, when the provided service constitutes portfolio management, shall not receive commission/interest/any other kind of pecuniary or non-pecuniary benefit from anyone but the customer.
What Are the Registration Documents of Virtual Asset Service Providers?
The new order provides a detailed list of the VASP requirements, as well as the obligations of the administrator (e.g., director of the company, member of the supervisory board, person with the deciding authority, etc.) and significant shareholder/beneficiary. The non-exhaustive list is as follows:
- Fully filled out VASP registration form provided by the NBG.
- The list of all the services that a VASP candidate will provide.
- Information on each of the VASP administrators and significant shareholders/beneficiaries.
- A declaration on the compliance of the provided documents with the law.
- A business plan with a budgeting forecast of at least the next 3 years.
- Internal instructions/policy that a VASP will incorporate to ensure compliance with AML/CFT regulations.
The NBG can also request additional documents during the review process of the application and fix a deadline for this.
The provided documents may not satisfy the VASP requirements. In that case, the NBG is authorized to grant a candidate 30 calendar days to resolve the issues.
What is the Registration Procedure Like?
After the submission of the documents, NBG will review and make a decision regarding the registration within 60 calendar days. If necessary, NBG can extend this time period by another 60 calendar days. Naturally, the applicant will be notified about such an extension before the expiration of the original time limit.
What to Avoid to Successfully Register a Virtual Asset Service Provider?
The legal basis for the refusal to register a VASP candidate includes but is not limited to:
- Inaccuracy in the presented information.
- Non-compliance with the requirements with regard to the permitted services and scheduled activities.
- If the service provision scheme that was provided at later stages (after it was requested either as additional information or to resolve an issue) is significantly different from the originally presented scheme.
Further, there are grounds for the revocation of VASP registration. See below.
What are the Grounds for the Revocation of VASP Registration?
The instances when NBG can revoke the VASP registration are:
- Upon the written de-registration request filed by the VASP.
- When insolvency proceedings have been commenced against the VASP.
- There is an inaccuracy in the documents provided to NBG for the purpose of registration.
- The VASP does not conduct its activities in accordance with the service scheme that was provided in the registration process.
- The VASP no longer satisfies the registration eligibility requirements.
- On the basis of a legally effective court decision concerning the revocation of the VASP’s right to conduct its business.