Cryptolicense in Georgia

The license is required for the following types of cryptocurrency-related activities:

• Exchange of cryptocurrencies for fiat currencies.
• Provision of wallet services for the storage of cryptocurrencies.
• Conducting cryptocurrency operations on behalf of clients.
• Facilitating the attraction of investments in cryptocurrency projects.

The issuance of a crypto license in Georgia is implemented with the aim of ensuring security, preventing financial crimes, complying with anti-money laundering laws, and protecting consumer interests.

The Georgian government has introduced a series of legislative changes aimed at creating favorable conditions for the development of blockchain and crypto projects. Technological parks have been established in the country to attract international investors and stimulate innovation. This publication will discuss aspects of the progressive regulatory system and the conditions that must be met to obtain a cryptocurrency license in Georgia.

Launching a crypto startup in Georgia: how does the jurisdiction attract investors?

Georgia has achieved significant success in the cryptocurrency industry. The Georgian government has permitted the exchange of cryptocurrencies, the sale of tokens, and the use of virtual wallets for storing electronic money, indicating a step-by-step recognition and integration of cryptocurrencies into the country's financial system. To engage in cryptocurrency activities on legal grounds, it is necessary to obtain a cryptocurrency license in Georgia.

Furthermore, launching a crypto startup in Georgia is one of the financially feasible options when compared to other European countries. It is possible to register a cryptocurrency business in Georgia remotely

However, before opening a cryptocurrency company in Georgia, it is advisable to familiarize oneself with the legal formalities and nuances of fiscal policies. In the latter case, obligations arise regarding income derived from the country where the source of income is located.

Among other advantages of obtaining a cryptocurrency license in Georgia, the following can be highlighted:

• Georgia is one of the leading countries in terms of ease of doing business.
• There is a low corporate tax rate compared to some other countries in the region.
• It is possible to register a crypto company in Georgia as a non-resident.
• Reinvested profits are fully exempt from taxes.
• Low operating costs.
• An attractive investment environment.
• No restrictions on trading tokens.
• Exchanging crypto for fiat currency, as well as selling hash rates from Georgia to other countries, is not subject to VAT, reducing the financial burden on cryptocurrency companies.
• Low electricity prices, which is a significant advantage for miners as cryptocurrency mining requires substantial computational resources and, consequently, consumes a lot of electricity.
• No direct prohibitions on payments in virtual currency.

Regulation of crypto activities in Georgia

In 2021, the government of Georgia enacted a law that legalized cryptocurrency. The law specifies that cryptocurrencies are not considered legal tender but can be used as an investment instrument. The Georgian government also plans to establish a special crypto hub to attract foreign investments in the cryptocurrency sector. The hub will include a data processing center, a crypto exchange, and other infrastructure facilities.

With its innovative approach and commitment to digitization, Georgia is focused on leveraging advanced technologies while simultaneously ensuring the security of cryptocurrency transactions and compliance with legislation. Therefore, if you are interested in establishing a cryptocurrency exchange in Georgia, it is important to note that as of July 2023, the requirements for the registration and deregistration of Virtual Asset Service Providers (VASPs) have been updated.

Offering crypto services without a license is punishable by imposing penalty sanctions. To operate as a VASP, a service provider must be registered as a Limited Liability Company or Public Limited Company. The provision of Virtual Asset (VA) services through an agent is prohibited.

Registration of a crypto company in Georgia involves the submission of the following documentation to the National Bank of Georgia to acquire a crypto license:

• Registration information: properly completed registration form.
• Activities details: a comprehensive list of services that the company plans to offer.
• Administrator Identification: identification details of each administrator of the company.
• Ownership Information: information about direct/indirect and beneficial owners of a significant share; for individuals: scanned copies of identity documents; for corporate entities: confirmation from the Business Register.
• Executive Qualifications: document proving that the executives seeking a cryptocurrency license have relevant education and experience in the crypto industry.
• Financial Standing Evidence: evidence of previous activity in a similar position and financial standing of administrators and significant owners.
• Business and Shareholder Details: copies from the Business Registry and Shareholder Registry (for publicly traded companies), incorporating all modifications in force as of the date when the VASP registration application is submitted.
• Website Information: data about the website(s) to be used for VASP services; document proving the legal right to use the website(s).
• Application Details: name and details of the application(s) that the licensed company plans to use for VA services.
• Real Estate Ownership Proof: document proving ownership of the real estate where the registered office of VASP is located.
• Market strategy: detailed business plan with a financial prospective for the upcoming three years.

Ensure that all documents are either originals or notarized copies. Notarized translations into Georgian may be required, and it's important to be prepared for potential additional requests from the regulator during the evaluation process.

It is essential to note that to acquire a crypto certificate, a regulator obliges all the aforementioned documents to be submitted either in their original form or as notarized copies. Additionally, notarized translations of the documents into Georgian are mandatory. The regulator holds the discretion to request additional information as deemed necessary.

Crypto regulation in Georgia: requirements for administrators

Innovations in the regulation of crypto service providers in Georgia have detailed requirements for administrators.

Also, it should be noted that a company with a cryptocurrency license in Georgia must have a minimum of 2 directors if one of them is simultaneously a shareholder or partner of the company.

Cryptocurrency license for business in Georgia: License refusal

The National Bank of the country may refuse to register a VASP in Georgia for several reasons, the main ones are described below:

• Failure by the applicant for cryptocurrency licensing in Georgia to fulfill obligations regulated by the new law within specified terms.
• Submission of false/misleading information to the competent authority.
• The proposed list of VASP services does not correspond to what is specified in the Georgian Law on the National Bank.
• Inconsistency between the initial implementation scheme of VA services and the scheme that was amended/corrected at the direction of the competent authority.
• Inconsistency of the electronic system for providing VASP services with the one submitted to the NBG in the VA service implementation scheme.
• Head office/branches (area and location) do not ensure compliance with the requirements of the Georgian Law on the National Bank.

If a person or a business entity intends to obtain ownership in the capital of a VASP, thus securing control of 20%, 30%, or 50%, or to divest (directly or indirectly) their own interest in the VASP, they must submit the appropriate notification to the National Bank of Georgia.

The bank can cancel the registration of a VASP in Georgia if:

• A relevant application is submitted by the VASP.
• The VASP is required to be liquidated by a court decision (in insolvency proceedings).
• The documents submitted to the regulator contain inaccurate/misleading information.
• The competent authority excludes the VASP from the Business Register.
• The cryptocurrency service provider violates the AML/CTF policy.
• The VASP fails to submit the AML/CTF report to the National Bank twice in a row within the specified terms.
• The VA service provider systematically violates the Law on the National Bank of Georgia.
• The VASP has not implemented appropriate software to automatically detect suspicious transactions.
• The VASP fails to submit the requested documentation to the National Bank for verification.
• The head office is not located at the address specified in the VASP's registration form.
• The cryptocurrency service provider has not commenced cryptocurrency activities within 6 months from the date of registration (can be confirmed by a report submitted to the NBG).
• The VASP has not engaged in cryptocurrency activities for more than 6 months, confirmed by a report submitted to the National Bank.
• The VASP provides services different from those specified in its implementation scheme.
• The continued operation of the VASP may negatively impact the stability of the financial system of the Republic of Georgia.

How to acquire a crypto license in Georgia: requirements

In accordance with the legislation, every licensed company involved in electronic finance within the country is empowered to:

• Offer services associated with cryptocurrency investment.
• Generate their own tokens for subsequent sale and carry out ICOs in Georgia.
• Establish a cryptocurrency exchange in Georgia and deliver services for crypto-fiat or crypto-crypto exchange.

A cryptocurrency license in Georgia grants extensive authority for conducting transactions with cryptocurrencies, including:

• Transferring crypto-assets.
• Conducting payments.
• Debiting and crediting funds.

The essential prerequisites for securing a cryptocurrency license in Georgia are outlined as follows:

1. The incorporation of the company in Georgia as a legal entity is mandatory.
2. Adequate capital is required to sustain the company's operations.
3. Qualified personnel must be part of the company's workforce.
4. The implementation of dependable security systems is a necessity.

Acquiring a crypto exchange license in Georgia follows the outlined procedure:

As mentioned earlier, obtaining a crypto license in Georgia is allowed for legal entities registered as either Limited Liability Company or Corporation. There are no strict requirements regarding the founder's residency or the mandatory establishment of a physical office (a virtual office is acceptable). International investors often choose to register a company within Georgia's Free Industrial Zones (FIZ) to take advantage of tax incentives and other business benefits.

The procedure for acquiring a cryptocurrency license in Georgia involves the following steps:

1. Incorporating the Company in Georgia: registering your company as either an LLC or JSC in Georgia.
2. Developing a Business Plan: creating a detailed business plan that explicitly describes the objectives, strategies, and business model of your cryptocurrency venture.
3. Document Compilation: Compiling the necessary documents to verify the financial stability of the company.
4. Company Assessment: Subjecting the company to an assessment to ensure compliance with both local and international laws.
5. Submission of Application: Submitting the application for obtaining a cryptocurrency license to the National Bank of Georgia.
6. Payment of the necessary fees.
7. Licensing authorities may conduct various checks, including assessments of financial stability, legal integrity, security, and compliance with standards.

Upon the successful completion of all phases and the approval of your application, you will be granted an official cryptocurrency license. Entities acquiring a cryptocurrency exchange license in Georgia must comply with routine reporting mandates, security benchmarks, and additional responsibilities.

It is essential to consult with legal experts specializing in cryptocurrencies, specifically those experienced in facilitating the acquisition of cryptocurrency licenses, to ensure comprehensive adherence to the stipulated requirements.

For those considering crypto ventures in Georgia, our specialists offer support in acquiring certificates and aligning with evolving regulatory standards.