CRYPTO REGULATION IN GEORGIA 2025

In Georgia, laws requiring companies engaged in cryptocurrency activities to obtain a licence from the National Bank of Georgia came into force on 1 January 2023. These measures are aimed at ensuring compliance, security and accountability of cryptocurrency market participants.

Benefits:

• Quick procedure for registration and obtaining a licence.
• Low business costs and taxes.
• No minimum capital requirement.

Requirements for obtaining a VASP licence in Georgia:

• Company Director:
  • Higher education in economics, finance, banking, business management, auditing, accounting, law, information technology or related fields.
  • No criminal record, especially for serious offences such as terrorist financing or money laundering.
  • No violations of business, banking or financial legislation that threaten the normal functioning of the organisation or the financial sector.
  • No debt obligations, insolvency filings or involvement in transactions that are materially detrimental to the provision of virtual asset services.
• The business model and structure of the company:
  • Provide a detailed description of the company's business model and structure, including a description of the services and operations offered.
  • Developing and implementing KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance procedures.
• Financial Requirements:
  • Providing financial reports to prove the financial strength of the company.
  • Adequate resources are available to ensure proper functioning and compliance with all regulatory requirements.

It is important to note that the law does not regulate virtual assets that are not transferable or used for payments and/or investments, such as loyalty programmes, game points or other types of virtual assets used only in a closed virtual space. The law also excludes the regulation of non- fungible tokens (NFTs).

Thus, Georgia provides favourable conditions for doing business in the cryptocurrency sector, combining fast licensing with low costs and no minimum capital requirements.

As of 1 January 2023, laws requiring companies dealing with cryptocurrencies to obtain a licence from the National Bank of Georgia came into force in Georgia.

Benefits:

• Quick procedure for registration and obtaining a licence.
• Low business costs and taxes.
• No minimum capital requirement.

Requirements for obtaining a VASP licence in Georgia:

• Company Director:
  • Higher education in economics, finance, banking, business management, auditing, accounting, law, information technology or related fields.
  • No criminal record, especially for serious offences such as terrorist financing or money laundering.
  • No violations of business, banking or financial legislation that threaten the normal functioning of the organisation or the financial sector.
  • No debt obligations, insolvency filings or involvement in transactions that are materially detrimental to the provision of virtual asset services.
• The business model and structure of the company:
  • Providing a detailed description of the company's business model and structure, including a description of the services and operations offered.
  • Developing and implementing KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance procedures.
• Financial Requirements:
  • Providing financial reports to prove the financial strength of the company.
  • Adequate resources are available to ensure proper functioning and compliance with all regulatory requirements.

It is important to note that the law does not regulate virtual assets that are not transferable or used for payments and/or investments, such as loyalty programmes, game points or other types of virtual assets used only in a closed virtual space. The law also excludes the regulation of non- fungible tokens (NFTs).

Thus, Georgia provides a favourable environment for doing business in the cryptocurrency sector, combining fast licensing with low costs and no minimum capital requirements.

Companies in Georgia engaged in cryptocurrency activities are required to comply with certain regulations and are generally required to register and obtain appropriate licences if their activities fall under the regulation of financial transactions.

Under Georgian law, activities related to the exchange, storage or transfer of cryptocurrency may qualify as a financial transaction and require a licence to conduct such transactions. In particular, the provision of services for the exchange of cryptocurrency or other virtual assets requires a licence for "money transmission" (money transfer) issued by an appropriate state body, such as the National Agency of Banking and Finance of Georgia.

Thus, companies that plan to engage in cryptocurrency activities are advised to consult with lawyers or financial advisors to obtain the necessary licence and comply with all regulatory requirements to avoid legal consequences for operating without the appropriate permits.

In Georgia, cryptocurrency companies are required to obtain a licence to operate legally. On 1 July 2023, the Law on the Procedure for Registration of Virtual Asset Service Providers (VASPs) came into force, requiring all companies engaged in cryptocurrency activities to obtain a relevant licence from the National Bank of Georgia.

Basic requirements for obtaining a licence:

• Company registration: It is necessary to register a legal entity in Georgia, which can be a limited liability company (LLC) or a joint stock company (JSC). For JSC, the minimum authorised capital is GEL 100,000 (~€34,947), of which 25% must be contributed immediately after registration.
• Local director: The company must have at least one local director who is a resident of Georgia. This director may fulfil the functions of an Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) officer.
• Office in Georgia: It is necessary to have a physical office in Georgia, where the actual management of the company's activities will be carried out.
• AML/CFT Policies: The Company should develop and implement procedures and systems to prevent money laundering and terrorist financing at all levels of its operations.
• Licence fee: The state fee for applying for a licence is GEL 5,000 (~€1,700).

The process of obtaining a licence usually takes between 2 and 4 months, including time to register the company and prepare the necessary documents.

Compliance with these requirements is necessary for the legal and efficient operation of a cryptocurrency company in Georgia.

In Georgia, the process of obtaining a cryptocurrency licence is relatively quick and efficient. On average, the entire process takes 2 to 4 months, which is significantly faster compared to other jurisdictions where the process can take 6 to 9 months.

The main stages of obtaining a licence:

1. Company registration: Establishment of a legal entity in Georgia that meets the requirements for providing virtual asset services.
2. Compliance with AML/CFT requirements: Development and implementation of procedures to prevent money laundering and terrorist financing.
3. Preparation and submission of the application: Collection of necessary documents and submission of the application to the National Bank of Georgia.
4. Payment of state duty: Payment of registration fee of GEL 5,000 (~1,700 euro).

Compliance with all these steps ensures a fast and efficient obtaining of a cryptocurrency licence in Georgia.

In Georgia, foreign citizens have the right to own and operate cryptocurrency companies. The country's legislation does not limit the participation of non-residents in business, including the sphere of virtual assets. In order to conduct activities with cryptocurrencies, it is necessary to register a legal entity in the form of a limited liability company (LLC) or a joint stock company (JSC). There is no minimum authorised capital requirement for LLCs, while for JSCs the minimum capital is GEL 100,000 (~€34,947), of which 25% must be contributed immediately after registration.

It is important to note that as of 1 July 2023, Decree No. 94/04 came into force in Georgia, which regulates the registration of virtual asset service providers (VASPs) with the National Bank of Georgia. All companies engaged in activities with cryptocurrencies are required to obtain a relevant licence.

Thus, foreign investors are free to own and operate cryptocurrency companies in Georgia, subject to all regulatory requirements, including obtaining the necessary licence and complying with anti-money laundering and countering the financing of terrorism (AML/CFT) standards.

In Georgia, foreign citizens may be members of the board of directors of cryptocurrency companies. The legislation does not limit the participation of non-residents in the management of such companies. However, in order to obtain a Virtual Asset Service Provider (VASP) licence, at least one of the authorised persons representing the company must be in Georgia for at least 14 calendar days per month.

This requirement is intended to ensure effective monitoring and compliance with local regulations.

In Georgia, in order to obtain a cryptocurrency licence from the National Bank, a physical office is required in the territory of the country from where the actual management of the company's activities will be carried out. However, the legislation does not establish a mandatory requirement to open a bank account in a Georgian bank in order to obtain such a licence. This means that a company can obtain a licence without having a bank account in Georgia. Nevertheless, it is recommended to open a current account in a Georgian bank for efficient business operations, which will simplify financial transactions and increase the confidence of clients and partners.

In Georgia, to obtain a Virtual Asset Service Provider (VASP) licence, a legal entity may be registered in the form of a limited liability company (LLC) or a joint stock company (JSC). For LLC there is no minimum authorised capital, which allows to start the activity with minimal financial investments. In case of JSC, the minimum authorised capital is GEL 100,000 (~€34,947), of which 25% must be contributed immediately after registration.

Thus, cryptocurrency companies in Georgia can start their activities with minimal financial investments by registering in the form of an LLC without the required minimum authorised capital.

In Georgia, a Virtual Asset Service Provider (VASP) licence is issued by the National Bank of Georgia and is valid indefinitely, subject to compliance with all regulatory requirements and timely payment of annual state fees. However, to maintain the validity of the licence, it is necessary to annually confirm compliance with the established standards and pay the relevant fees.

Cryptocurrency is not recognised as a legal tender in Georgia, but its use and transactions with it are not prohibited. This means that cryptocurrency can be used as an asset when forming the authorised capital of a company. However, it should be borne in mind that when valuing cryptocurrency for these purposes, its volatility and potential risks associated with changes in the exchange rate should be taken into account. It is recommended to consult with professional valuers and lawyers to ensure compliance with all legal requirements and minimise potential risks.

In Georgia, there is no mandatory minimum amount of authorised capital required to register a company in the form of a limited liability company (LLC). This means that founders can independently determine the size of the authorised capital that will meet their needs and business development plans.

Payment for the authorised capital may be made either in cash or by transferring property that can be valued in monetary terms and is not prohibited for turnover. This may include real estate, securities, machinery, intellectual property and other assets. It is important to note that the Georgian legislation does not establish mandatory valuation of property contributed as payment for the authorised capital, however, it is recommended to carry out such valuation at market value in order to prevent possible tax risks in the future.

Thus, when establishing a cryptocurrency company in Georgia, founders have flexibility in determining and paying for the authorised capital, which allows them to adapt these parameters to the specific needs of the business.

In Georgia, there is no minimum amount of authorised capital required to register a company in the form of a limited liability company (LLC). This means that founders can independently determine the amount of the authorised capital that meets their needs and business development plans.

However, for a joint stock company (JSC), the minimum authorised capital is GEL 100,000 (~€34,947), of which 25% must be contributed immediately after registration.

Thus, when establishing a cryptocurrency company in Georgia, founders have flexibility in determining and paying for the authorised capital, which allows them to tailor these parameters to the specific needs of the business.

Obtaining a crypto licence in Georgia offers a number of significant advantages for companies operating in the virtual asset sector:

• Favourable tax policy: Georgia offers low tax rates, including 15% corporate tax and 5% dividend tax. In addition, reinvested profits are fully exempt from taxation, which favours business growth and development.
• Ease and speed of obtaining a licence: The process of registering a company and obtaining a crypto licence in Georgia takes 2 to 4 months, which is much faster compared to other jurisdictions.
• No minimum authorised capital requirements: There is no mandatory minimum authorised capital for a limited liability company (LLC), which reduces the initial financial outlay for entrepreneurs.
• Preferential taxation of transactions with virtual assets: The exchange of cryptocurrency for fiat currencies and the sale of hashrate are not subject to VAT, which reduces the financial burden on cryptocurrency companies.
• Access to low electricity prices: Georgia is known for its low electricity rates, which is especially beneficial for mining operations.
• No direct prohibitions on the use of virtual currency: There are no legal restrictions on the use of cryptocurrencies in Georgia, which creates a favourable environment for doing business in this sphere.

These advantages make Georgia an attractive jurisdiction for companies seeking to operate legally and efficiently with virtual assets.

In Georgia, the legislation does not oblige cryptocurrency companies to conduct a mandatory audit of financial statements. However, depending on the size and structure of the business, an audit may be recommended to ensure transparency of financial operations and increase trust from partners and customers. In addition, an audit may be necessary to prepare documents when opening bank accounts, obtaining loans or other financial services.

There are no restrictions on the participation of non-residents in the management of cryptocurrency companies in Georgia. Foreign citizens may be appointed as directors of such companies, subject to certain requirements. For example, the director must have a higher education in the field of economics, finance, law or information technology, as well as experience in a managerial position in the relevant field.

However, to obtain a Virtual Asset Service Provider (VASP) licence, at least one of the authorised persons representing the company must be present in Georgia for at least 14 calendar days per month.

This requirement is intended to ensure effective monitoring and compliance with local regulations.

Thus, non-residents can be directors of cryptocurrency companies in Georgia, provided that the above requirements are met and the country's legislation is complied with.

Georgia is taking comprehensive measures to prevent money-laundering and terrorist financing, complying with international standards and recommendations.

Legislative Initiatives:

• Legislation: The Law of Georgia "On Assistance to Combating Money Laundering and Terrorist Financing" establishes the legal framework for combating these offences. The latest amendments, which entered into force in March 2024, expand the range of persons to be checked and clarify the procedures for checking based on reasonable suspicion.
• Extension of the scope of application: According to the amendments, as of 1 March 2024, central securities depositories licensed by the National Bank of Georgia shall be obliged to comply with the requirements on prevention of money laundering and terrorist financing similar to those imposed on banks and brokerage companies.

Oversight bodies and mechanisms:

• Financial Monitoring Service: Responsible for collecting and analysing information on suspicious financial transactions, as well as coordinating with other government agencies.
• Ministry of Justice: As of June 2024, the Ministry is responsible for overseeing measures to suppress terrorist financing through notaries and the Public Registry Agency.

International Co-operation:

• MONEYVAL Assessment: In May 2024, the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) published a report confirming Georgia's efforts to improve measures to prevent money laundering and terrorist financing.

Thus, Georgia continues to strengthen legislative and institutional mechanisms to effectively combat money laundering and terrorist financing, in line with international standards and recommendations.

Obtaining a cryptocurrency licence in Georgia can be challenging due to strict regulatory requirements and procedures.

The main challenges are:

1. Compliance with regulatory requirements: Georgian legislation imposes high requirements on companies wishing to obtain a crypto licence. A detailed business plan, information on beneficial owners and directors, and proof of financial stability must be provided. All documents must be notarised and translated into Georgian.
2. Development and implementation of AML/CFT systems: Companies are required to develop and implement AML/CFT systems, which requires significant resources and time.
3. Physical presence in Georgia: One of the directors or authorised persons must be in Georgia for at least 14 days per month, which may be inconvenient for foreign investors.
4. Compliance with office space requirements: The company must have a physical office in Georgia, which may incur additional costs.
5. Meeting deadlines: The process of obtaining a licence can take between 2 and 4 months, which requires careful planning and preparation.

Thus, despite the attractiveness of Georgia as a jurisdiction for cryptocurrency business, the process of obtaining a crypto licence requires careful preparation and compliance with all regulatory requirements.

Cryptocurrency companies can open bank accounts in Georgia, but the process can be challenging. Georgian banks do not provide cryptocurrency custody or management services, but do allow transactions with fiat money derived from digital asset transactions. To open an account, a standard set of documents must be provided, including the company's founding documents, information on beneficial owners and directors, and proof of financial stability. However, some banks may require additional information or have higher requirements for customers engaged in cryptocurrency activities. It is recommended to consult with the chosen bank in advance and prepare all necessary documents for successful account opening.

In Georgia, the process of obtaining a Virtual Asset Service Provider (VASP) licence requires careful preparation and compliance with certain requirements. However, companies that already hold such a licence may be available in the market, allowing for faster market entry and lower administrative costs.

The advantages of buying a ready-made licensed company:

• Reduced start-up time: Purchasing an already licensed company avoids the lengthy process of obtaining a licence, which can take between 2 and 4 months.

• Reduced administrative costs: Buying a ready-made company eliminates the need to collect and submit an extensive set of documents required to obtain a licence.
• Having an established reputation: A ready-made company may have a history of operations, which increases trust from customers and partners.

Risks and considerations:

• Due diligence: It is important to conduct a detailed background check to ensure that there are no legal or financial problems.
• Regulatory compliance: It should be ensured that the acquired company complies with all relevant requirements of Georgian legislation, including anti-money laundering and countering the financing of terrorism (AML/CFT) standards.
• Business model adaptation: After an acquisition, it may be necessary to adapt the business model and internal processes to current goals and strategies.

When considering the purchase of a ready-made licensed company in Georgia, it is advisable to consult legal and financial professionals to assess all the risks and benefits associated with such a move.

In Georgia, the process of obtaining a Virtual Asset Service Provider (VASP) licence is regulated by the National Bank of Georgia. According to Resolution No. 94/04 dated 13 June 2023, which came into force on 1 July 2023, entities wishing to provide services with virtual assets are required to register with the National Bank of Georgia and meet the requirements established to ensure anti-money laundering and countering the financing of terrorism (AML/CFT).

The main stages of obtaining a VASP licence:

1. Document preparation and filing: Applicants must provide detailed documentation, including information on beneficial owners, management, financial position and AML/CFT
2. AML/CFT Compliance: Organisations are required to develop and implement effective systems and procedures to prevent money laundering and terrorist financing.
3. Waiting for a decision: After submitting the documents, the National Bank of Georgia reviews the application and makes a decision on registration.

Cryptocurrency exchange Bybit recently received a VASP licence from the National Bank of Georgia, highlighting the company's commitment to compliance and support for the country's digital economy.

Thus, the process of obtaining a VASP licence in Georgia requires thorough preparation and compliance with all regulatory requirements set by the National Bank of Georgia.