Crypto License in Georgia
Georgia has emerged as an increasingly favored locale for crypto enterprises by its congenial corporate milieu and comparatively lenient statutory framework.
Until 2023, cryptocurrency in Georgia was considered a controlled but unregulated sphere. However, on January 1, 2023, the government published a new draft law that establishes regulatory rules for cryptocurrency companies, the Law on Virtual Asset Service Provider (VASP) Registration Procedure, which came into force on July 1, 2023. Following the adoption of the new legislation, obtaining a cryptocurrency license from the National Bank of Georgia is mandatory for any business engaged in cryptocurrency activities.
The applicant must meet several requirements to obtain a crypto license in Georgia. Firstly, the applicant must be a legal entity registered in Georgia. To engage in cryptocurrency exchange operations, companies are required to demonstrate at least 1 local director and local office. Furthermore, it is mandatory for applicants to have a spotless criminal history and demonstrate a proven history of financial responsibility.
Upon application submission, the National Bank of Georgia shall carefully evaluate and investigate the candidate in question, ensuring due diligence in the process. Should the application be deemed satisfactory, the candidate will be granted a license to run a crypto enterprise.
Entities are obligated to adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) rules. Crypto businesses must implement AML/CTF policies and procedures, conduct customer due diligence, and report suspicious transactions to the Financial Monitoring Service of Georgia.
Cryptocurrency businesses are increasingly attracted to Georgia due to its favorable business climate and relatively relaxed limitations. In Georgia, obtaining a cryptocurrency license from the Ministry of Economy and Sustainable Development is mandatory for any business involved in crypto activities. This section will discuss the benefits of obtaining a crypto license in Georgia.
Legitimacy and Credibility
Obtaining a crypto license in Georgia provides legitimacy and credibility to a cryptocurrency business. A Ministry of Economy and Sustainable Development license demonstrates that the business operates legally and has met specific standards and requirements. Compliance with this regulation can bolster the faith and assurance of patrons and investors, ultimately expanding the scope of business ventures.
Access to Banking Services
Crypto businesses in Georgia that have licenses can open bank accounts and access banking services. This can be challenging for cryptocurrency businesses in other jurisdictions, as many banks hesitate to work with cryptocurrency-related businesses due to regulatory concerns. Access to banking services can help cryptocurrency businesses operate more efficiently and effectively.
Tax Benefits
Georgia stands out for its tax privileges among other jurisdictions: with a corporate tax rate of 15% and only 5% on dividend distributions, the country is attractive for cryptocurrency businesses. In addition, Georgia has no capital gains tax for individuals on crypto-asset transactions.
Low costs
In Georgia, applying for a license costs only GEL 5,000, which makes it stand out from many other jurisdictions. Moreover, there is no need to pay for license renewal in this jurisdiction. Not having to pay annual license renewal fees optimizes operational costs and facilitates budget planning.
Support from the Government
The Georgian government has expressed its support for developing the cryptocurrency industry. A cryptocurrency license can help businesses access government support, such as grants, subsidies, and other incentives. This can help crypto businesses grow and expand their operations.
Access to a Skilled Workforce
Georgia’s strong pool of skilled IT professionals can benefit crypto businesses requiring specialized talent. Obtaining a crypto license can help businesses attract and retain skilled employees, which can help them remain competitive and innovative.
For those contemplating the possibility of commencing a cryptocurrency enterprise in Georgia, it is imperative to comprehend the prerequisites for acquiring a cryptocurrency license.
Legal Entity Registration
The applicant must be a legal entity registered in Georgia to obtain a crypto license in Georgia. The business must be registered with the National Agency of Public Registry, and all necessary documents must be submitted.
Clean Criminal Record
The applicant must have a clean criminal record. All candidates are required to furnish a criminal background check from their respective countries of origin, as well as any other nations in which they have taken up residence within the previous five-year period.
Financial Responsibility
Applicants are mandated to exhibit a confirmed history of financial responsibility. This includes providing financial statements, business plans, and other relevant financial documents. Each of the founders of the company must not have outstanding financial obligations and must not have “insolvent” status.
Compliance with AML/CTF Regulations
Crypto enterprises operating in Georgia must adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) rules. The applicant must implement AML/CTF policies and procedures, conduct customer due diligence, and report suspicious transactions to the Financial Monitoring Service.
Physical Presence
The applicant must have a physical presence in Georgia. This includes having a registered office there and employing at least one local director.
Software
Before commencing operations, a company must install an electronic system that determines the volume of business and money laundering risks. This system should automatically detect unusual transactions based on DLT technology. When obtaining a crypto license in Georgia, the company must submit a detailed business plan to the National Bank. The bank may request a demo version of the system. The licensing information includes the name of the system, the manufacturer’s website address, and a description of the obligations to registered users.
Crypto License Registration in Georgia packages
Registration of Crypto Companies in Georgia
This section will examine the registration process for crypto companies in Georgia.
Register a Legal Entity: The first step to opening a crypto company in Georgia is registering a legal entity with the National Agency of Public Registry. This can be done online or in person at one of the registration offices. The applicant must provide all necessary documents, such as the company’s articles of association, identification documents, and proof of capital.
Obtain a Cryptocurrency License: Cryptocurrency businesses in Georgia must obtain a license from the Ministry of Economy and Sustainable Development. The applicant must meet specific requirements, such as having a minimum capital, having a clean criminal record, and complying with AML/CTF regulations. The application can be submitted online, and the processing time is up to 2 months.
Open a Bank Account: Cryptocurrency businesses in Georgia can open bank accounts and access banking services. To initiate a bank account, the candidate must furnish all requisite documentation, which may include the company’s registration certificate, identification papers, and evidence of residency.
Establish a Physical Presence: Crypto businesses in Georgia are required to have a physical presence in the country. This includes having a registered office and employing a local director. The applicant must provide proof of the physical address, such as a lease agreement or property ownership documents.
Comply with Relevant Laws and Regulations: Crypto businesses in Georgia must comply with relevant laws and regulations, such as taxation, AML/CTF regulations, securities laws, and consumer protection laws. The applicant must implement policies and procedures to ensure compliance with these regulations.
Crypto Laws in Georgia
Until the beginning of 2023, every company engaged in crypto activities was free to operate in Georgia without the need for licensing. The cryptocurrency sector had no legal framework and was not regulated, and was controlled only by a few parameters: compliance with AML/KYC policies, taxation, and reporting.
However, on January 1, 2023, Georgia implemented new rules to regulate this sector. The government was concerned about the high level of anonymity of crypto assets, which led to more difficulty in tracking transactions. The new legislation played a key role in countering the use of assets for money laundering or terrorist financing. After further amendments, the Virtual Asset Service Provider (VASP) Registration Procedure Act came into force on July 1, 2023. Its main purpose is to increase control and transparency of virtual assets.
Licensing of crypto companies was practiced in Georgia even before the adoption of the law, but it was voluntary. Currently, every company, without exception, must register with the National Bank to obtain a Georgia crypto license,
The same applies to mandatory compliance with AML/KYC policies. Whereas previously this issue was lightly controlled, after July 1, 2023, it is strictly controlled and involves penalties for violations. The new laws are based on the EU MiCA rules to ensure a transparent and secure environment in cryptocurrency activities.
It is worth noting that the new rules do not recognize cryptocurrency as a means of payment. A virtual asset is defined by a digital measure of value that can be fungible but not unique. It can be transferred or sold digitally, serving as a means of payment or investment, but cannot be used in the same way as legal tender.
Cryptocurrency Taxation in Georgia
Businesses need to understand the legal and regulatory landscape surrounding cryptocurrency in Georgia to operate legally and avoid potential penalties. This part discusses various aspects of operating a cryptocurrency business.
- Taxation of Crypto Mining: Crypto mining is considered an entrepreneurial activity in Georgia and is subject to a preferential tax regime. Income from crypto mining is subject to a 5% flat rate tax.
- Taxation of Cryptocurrency Exchange Activities: Income from cryptocurrency exchange activities is subject to the corporate income tax rate of 15% as well as to the dividends tax rate of 5%.
- Georgia has implemented the Common Reporting Standard (CRS) to exchange financial information automatically. Crypto businesses must comply with CRS reporting requirements, which include providing information on account holders, their financial assets, and income earned from cryptocurrency activities.
FAQ about Georgian Crypto license
Is trading cryptocurrencies legal in Georgia?
- Trading cryptocurrencies is legal in Georgia. However, crypto businesses must comply with relevant laws and regulations, including obtaining a license and complying with AML/CTF regulations.
What is the Georgian Cryptocurrency Industry Law?
The Virtual Asset Service Provider (VASP) Registration Procedure Act. enacted on July 1, 2023, establishes rules for the regulation of the crypto sector. The new legislation aims to increase control and transparency of virtual assets, preventing money laundering and terrorist financing.
How much does a crypto license cost in Georgia?
- The cost of a cryptocurrency license in Georgia varies depending on the crypto business type and the activities’ scope.
Do I need to apply for a crypto exchange license in Georgia?
- If you plan to operate a crypto exchange firm, you must obtain a cryptocurrency exchange license from the Ministry of Economy and Sustainable Development. This license is mandatory for any business involved in crypto exchange actions in Georgia.
Why should you mine crypto in Georgia?
- Firstly, the country has a low electricity cost, making it cost-effective to operate mining equipment. Secondly, the state has a favorable business climate with relatively relaxed regulations for crypto industries. Finally, crypto mining is considered an entrepreneurial activity and is subject to a preferential tax regime with a flat tax rate of 5%.
