Crypto license in Georgia

Georgia has been actively promoting itself as a hub for fintech innovation, with a growing community of tech companies, developers, and investors. Crypto registration opens doors to a network of potential partners and clients.

Georgia has developed a favorable legal framework for VASPs, making it an attractive jurisdiction for crypto businesses. On January 1, 2023, the legislative changes related to virtual assets came into force in Georgia. The legislative framework, among other things, establishes the Virtual Asset Service Providers’ (VASPs’) mandatory registration regime at the National Bank of Georgia (NBG), VASPs’ administrators’ Fit and Proper criteria, and Anti – Money Laundering and Counter – Terrorism Financing (AML/CFT) supervision framework.

Below we will consider the key stages of the process of receiving a crypto license Georgia and important aspects that should be taken into account for the effective implementation of cryptocurrency operations in the country.

Advantages of receiving VASP registration in Georgia:

• Legality. A favorable and transparent legal environment for the development of a crypto business.
• Favorable tax regime. No VAT and corporate income tax (if the profit is not distributed).
• Entering international markets. The ability to serve not only local customers, but also enter international markets.
• Simplicity. Lack of requirements for the charter capital and the residency of the beneficiaries.
• Accessibility of payment decisions. The ability to open an account with a Georgian bank and work with Georgian Lari.

The functionality of the Georgia crypto license

A Virtual Asset Service Provider (VASP) is a person who provides virtual asset service for the benefit of another person. The following activities are considered to be virtual asset services:

• Exchange (including via kiosks) between convertible virtual asset and fiat currencies (national or foreign), between one or more forms of virtual assets, between convertible virtual asset and financial instrument;
• Transfer of convertible virtual asset;
• Safekeeping and/or administration of convertible virtual asset or of the instrument enabling control over virtual asset;
• Portfolio management of convertible virtual assets (excluding collective portfolio management);
• Administration of the trading platform of the convertible virtual assets;
• Lending of convertible virtual asset;
• Initial Coin Offering of convertible virtual asset and/or service related to initial coin offering.

Key requirements for obtaining crypto license in Georgia

To get crypto registration in Georgia, the company must meet such key requirements:

• Requirements for the beneficiary and director of the company:

• One of the persons authorized to represent the VASP must be in the territory of Georgia for at least 14 calendar days during a calendar month;
• A director must have a higher education degree in fields such as Economics, Finance, Banking, Business Administration, Auditing, Accounting, Law, Information Technology, Quantitative Methods, or other relevant disciplines and/or at least 2 years of managing experience in fintech sector;
• The director and founders of the company must have no criminal record;
• AML officer and local staff is required (office manager, lawyers, operators/consultants) in amount that corresponds to the company’s turnover.

• Requirements regarding authorized capital:

There are no minimum authorized capital requirements, but it is better to show your financial stability according to your business plan. 

• Requirements for an office in Georgia:

You’ll need a local physical office, from which actual management will be carried out. 

• Requirements for the electronic system: The company  is obliged to implement a software (electronic) system, which is proportional to the nature, volume, money laundering and terrorist financing risks associated with it and ensures the automatic detection of noteworthy/unusual transactions by processing the information based on the distributed ledger technology (DLT).

• Requirements for internal policies: Mandatory preparation of AML/CFT documentation as a VASP and complying with KYC regulation.

The process of receiving Georgia crypto license

1. Preparation of corporate documents and registration of the company
2. Opening a bank account at a local bank in Georgia.
3. Preparation of documents for submitting an application for registration VASP. At this stage, it is necessary to fill out all the necessary questionnaires, prepare a business plan, and documentation about the company and management.
4. Application to the National Bank of Georgia
5. Consideration of the application by the National Bank of Georgia and the issuance of a license.

Timeframe for Obtaining a crypto license in Georgia may take from 4 to 6 months, depending on the planned services and the business plan of the company. In addition, keep in mind that the National Bank of Georgia has wide discretion and can request additional documents and information in the licensing process.

Conclusion

Despite the relatively new status of cryptocurrency regulation in Georgia, obtaining a license provides ample opportunities for business development in this area.  SBSB Fintech Lawyer has a high level of expertise in financial regulation and international law and will be happy to help you turn your business ideas into reality.