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.
The legislative framework establishes oversight for Virtual Asset Service Providers (VASPs) through endorsing and revoking registration, establishing eligibility criteria for administrators, Anti - Money Laundering and Counter - Terrorism Financing (AML/CFT) inspection and regulation, and defining requirements for information accompanying the virtual asset transfers. The framework also includes the issuance of written instructions and the authority to impose additional requirements, restrictions.
Accordingly, at this stage, the framework does not include VASPs’ prudential regulation and supervision with the purpose of consumer rights protection.
To access information about the legal acts, please visit the Georgian site of the National Bank of Georgia.
A virtual asset is 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. A virtual asset does not include digital representation of fiat currencies, securities, or other financial instruments.
Note: If an asset is a digital representation of fiat currencies, securities, or other financial instruments, the person providing services for such asset may be subject to licensing/registration under the "Law of Georgia On Securities Market" or other relevant legal act.
A convertible virtual asset is a virtual asset that has an equivalent value on the market, in national or foreign currency, in another virtual asset, and/or a financial instrument in wich it can be exchanged.
The following activities are considered to be virtual asset services:
Note: The above activities are only applicable to the Virtual Asset Service Providers (VASPs). For the activities permitted to other financial institutions, see the question: "Are other financial institutions allowed to provide virtual asset service?"
A Virtual Asset Service Provider (VASP) is a person who provides virtual asset service for the benefit of another person.
A Virtual Asset Service Provider (VASP) is obliged to register with the National Bank and to ensure the compliance with the requirements set by the National Bank of Georgia.
‘The rule for the Virtual Asset Service Provider’s (VASP’s) registration at the National Bank of Georgia, registration cancellation, and regulation’ was published and can be found on the website of the National Bank of Georgia.
If a person was providing virtual asset service for the benefit of another person before January 1, 2023, a person is required to submit the relevant registration documentation/information to the National Bank of Georgia (NBG) within 90 calendar days after the entry into force of the legal act of the NBG defining registration rule.
Note: This does not apply to persons who will start providing virtual asset service after registering as a Virtual Asset Service Provider (VASP) with the National Bank of Georgia.
A person is authorised to continue providing virtual asset service for the benefit of another person until the National Bank of Georgia takes a decision on registration application. If a person fails to submit the registration documentation/information within the stated period, or if registration is rejected by the National Bank of Georgia, a person is obliged to cease providing virtual asset service.
After January 1, 2023, only the persons who provided virtual asset services before that date have the right to continue providing virtual asset service until the National Bank of Georgia takes a relevant decision on registration.
The financial institutions authorised to provide virtual asset service are commercial bank, micro - bank (from July 1, 2023), microfinance organization and brokerage company.
These institutions are entitled to provide only the following virtual asset services:
A Virtual Asset Service Provider (VASP) is not authorised to undertake activities other than virtual asset service, auxiliary activities necessary to provide virtual asset service and to exchange their own virtual assets. This requirement excludes commercial bank, micro-bank (from July 1, 2023), microfinance organization, and brokerage company that are entitled to provide virtual asset service for the benefit of another person along with other activities defined by the respective legislation.
In accordance with the Law of Georgia "On Facilitating the Prevention of Money Laundering and the Financing of Terrorism", a Virtual Asset Service Provider (VASP) is an obliged person and is obliged for complying with its requirements.
A virtual asset is not a legal tender. Accordingly, it is prohibited to make payments with a virtual asset, except for the exceptional cases defined by the legal act of the National Bank of Georgia, which are essential for providing virtual asset service.
In accordance with the Organic Law of Georgia “On the National Bank of Georgia” Article 391, Paragraph 2: “Payments with virtual assets are prohibited, except for cases determined by a legal act of the National Bank of Georgia, which are necessary for the provision of virtual asset services.”. In addition, as per “The rule for the Virtual Asset Service Provider’s (VASP’s) registration at the National Bank of Georgia, registration cancellation, and regulation” (hereafter – “the rule”) approved by the decree N94/04 of the Governor of the National Bank of Georgia on June 13, 2023, Article 1, Paragraph 8: “The VASP is authorised to receive a commission/Interest/fee from the customer in the same Virtual Asset which was used for the virtual asset service provided.”. Hence, a legal entity registered in Georgia, or an individual entrepreneur registered in accordance with the Georgian legislation or any other organisational form with no status of a legal person, is not authorised to receive payment with a virtual asset(s) for the provision of services and/or goods; except for the case(s) as determined by the Article 1, Paragraph 8 of the rule. Moreover, please be informed that according to the provision of the Article 1, Paragraph 7 of the rule: “Under the instruction of the customer, the VASP is authorised to transfer the funds (in national or foreign currency) obtained as a result of exchange of convertible virtual asset to the payment service provider, the intermediary provider, or the acquirer (including the sub-acquirer) participating in the scheme.”
If a person carries out the exchange of virtual asset(s) solely using own funds and/or virtual asset resources as a client of a virtual asset service provider (including a virtual asset trading platform) with another client of the same virtual asset service provider without any form of arrangement with a third party and without providing virtual asset service for the benefit of this third party, the person is not subject to the registration as a Virtual Asset Service Provider at the National Bank of Georgia.
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