Cryptolicence in Georgia

12.12.2023

• Requirements

Since 2022, Georgia has been taking active steps to develop crypto-business in the country. For this purpose, a number of regulatory acts have been adopted to regulate the activities of companies engaged or planning to engage in crypto activities in Georgia. From 2023, these companies are required to register with the National Bank of Georgia and obtain the status of Virtual Asset Service Provider (VASP).

• The National Bank of Georgia defines virtual assets as a digital representation of value that is interchangeable and non-unique, can be digitally traded or transferred, and can be used for investments and/or payment purposes. The term "virtual asset" does not include digital representation of fiat currencies, securities, or other financial instruments.
   
• Officially, virtual assets in Georgia do not belong to the payment instrument, but in practice the national regulator is quite loyal to cryptocurrencies.
   

Companies that have received VASP status from the National Bank may carry out one or more of the following activities:

• exchange of virtual asset (including through cryptomats) for national or foreign currency, other virtual asset or financial instrument;
• transfer of a convertible virtual asset;
• safekeeping/administration of the virtual asset;
• portfolio management of virtual assets;
• administration of the trading platform of virtual assets;
• lending of virtual asset;
• Initial Coin Offering (ICO) of convertible virtual assets and/or other services related to ICOs.

Requirements

Companies applying for VASP status should comply with a set of requirements - the main ones are:

1. The company must be registered in accordance with the legislation of Georgia in the form of a limited liability company or a joint stock company.
    
2. The director of a legal entity must meet a number of qualification and reputational criteria (education requirements, work experience, absence of criminal record). In addition, he/she must be present in Georgia for at least 14 calendar days per month. It is prohibited to be a director of two VASPs at the same time (unless they are members of the same group of companies).
    
3. The beneficial owners of a legal entity are also subject to a number of reputational requirements - absence of criminal record, other violations of law, bankruptcy or failure to fulfil financial obligations.
    
4. The head office of the company with VASP status, from where its activities will be managed, should be located in Georgia. The company should systematically register transactions with virtual assets, and have records of the actions of such transactions. A video surveillance system shall be installed in the office.
    
5. Before starting the activity, a legal entity must get a licence and use special software for automatic detection of suspicious transactions.
    
6. The company must, among other things, develop an internal policy aimed at preventing money laundering and terrorist financing (AML policy), and ensure that all internal processes of the company comply with such policy.

The National Bank of Georgia shall make a decision on granting VASP status (refusal to grant VASP status) within 2 months from the date of application. The timeframe may increase if additional documentation is requested from the applicant.

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