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.
In Georgia, cryptocurrency is considered a controlled but not regulated sphere, meaning permission from the National Bank of Georgia is not required to operate a crypto business. However, obtaining a cryptocurrency license from the Ministry of Economy and Sustainable Development is mandatory for any business involved 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, aspiring candidates must possess at least 200,000 Georgian lari or roughly 64,000 US dollars. Similarly, the minimum capital requirement for cryptocurrency wallet activities is 100,000 Georgian lari or approximately 32,000 US dollars. Furthermore, it is mandatory for applicants to have a spotless criminal history and demonstrate a proven history of financial responsibility.
Upon application submission, the Ministry of Economy and Sustainable Development 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.
It is essential to recognize that while the crypto sector in Georgia is not heavily supervised, 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.
Cryptocurrency businesses in Georgia with a license are eligible for certain tax benefits. For example, cryptocurrency mining is considered an entrepreneurial activity in Georgia and is subject to a preferential tax regime. This can reduce crypto businesses’ overall tax burden, increasing profitability.
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.
Minimum Capital Requirement
To qualify for a crypto exchange operation, applicants must possess a minimum capital of 200,000 Georgian lari or about 64,000 US dollars. For crypto wallet activities, the minimum capital requirement is 100,000 Georgian lari or roughly 32,000 US dollars. The applicant must provide proof of the source of the capital.
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.
Applicants are mandated to exhibit a confirmed history of financial responsibility. This includes providing financial statements, business plans, and other relevant financial documents.
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.
The applicant must have a physical presence in Georgia. This includes having a registered office there and employing local staff.
Payment of Fees
The applicant must pay the required application and license fees. The fees vary depending on the cryptocurrency business type and the activities’ scope.
Registration and Opening of Crypto Companies in Georgia
This section will examine the registration and opening 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 approximately 30 business days.
- 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 local staff. 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.
In addition to the standard registration and opening process for crypto companies, there is also the option to establish a company in one of Georgia’s Free Industrial Zones (FIZ). There are four FIZs in Georgia – two in Kutaisi, one in Tbilisi, and one in Poti. Companies established in FIZs are not subject to income tax, making them an attractive option for cryptocurrency businesses.
Crypto Laws in Georgia
Cryptocurrency businesses in Georgia must still comply with relevant laws and regulations.
- Taxation: Crypto activities in Georgia are subject to taxation. Crypto mining is considered an entrepreneurial activity subject to a preferential tax regime. Income from exchange activities is subject to corporate income tax. Additionally, value-added tax (VAT) may apply to crypto transactions.
- Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Regulations: Georgia’s Cryptocurrency businesses must comply with AML/CTF regulations. This includes implementing AML/CTF policies and procedures, conducting customer due diligence, and reporting suspicious transactions to the Financial Monitoring Service of Georgia.
- Securities Laws: Crypto tokens that meet the definition of securities under Georgian law are subject to securities laws. This includes registration requirements and disclosure obligations.
- Consumer Protection Laws: Cryptocurrency businesses must comply with consumer protection laws. This includes providing accurate information about the risks and benefits of investing in cryptocurrencies and providing clear and transparent terms and conditions for their services.
- Foreign Exchange Laws: Crypto exchange activities in Georgia may be subject to foreign exchange laws. This includes obtaining a crypto exchange license in Georgia and complying with reporting requirements.
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%.
- Value-Added Tax (VAT): Crypto transactions may be subject to VAT. The VAT rate is currently set at 18%.
- Companies registered in FIZs are not subject to income tax. This makes FIZs an attractive option for cryptocurrency businesses looking to establish a presence in Georgia. However, the country 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?
- There is no specific “Georgian Cryptocurrency Industry Law” in Georgia. Crypto businesses in Georgia are subject to various laws and regulations, including taxation, AML/CTF regulations, securities laws, and consumer protection laws.
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%.