Cryptocurrency Compliance: Georgia’s Approach to VASP Regulation

Georgia, which is located at the crossroads of Eastern Europe and Western Asia, has made significant strides in the world of cryptocurrencies and blockchain technology.

As the world's interest in digital assets has grown in recent years, Georgia has not only embraced these innovative technologies, but has also taken steps to create a regulatory framework to govern their use. 

On June 13, 2023, the President of the National Bank of Georgia approved Order No. 94/04, which is a Rule of registration, cancellation of registration and regulation of the VASP at the National Bank of Georgia. So, from July 1, 2023, a new regulation came into force in Georgia, defining VASP and requiring registration with the National Bank of Georgia. 

Main features

According to Organic law of Georgia “On the National Bank of Georgia” regarding amendments to the Organic Law of Georgia, the virtual asset is not a legal tender. It is prohibited to make payments with a virtual asset, except for the cases defined by the legal act of the National Bank of Georgia, which are necessary for the implementation of the virtual asset service. 

Also Georgian legislation gives a definition of “convertible virtual asset” – meaning a virtual asset that has an equivalent value in the market in national or foreign currency, another virtual asset and/or financial instrument, in which it can be exchanged.

As for the VASP it is a person who provides virtual asset service for the benefit of another person. 

The types of virtual asset services include the following activities:

  1. 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.
  2. Transfer of convertible virtual asset.
  3. Safekeeping and/or administration of convertible virtual assets or of the instrument enabling control over virtual assets.
  4. Portfolio management of convertible virtual assets (excluding collective portfolio management).
  5. Administration of the trading platform of the convertible virtual assets.
  6. Lending of convertible virtual assets.
  7. Initial Coin Offering of convertible virtual asset and/or service related to initial coin offering.

The VASP is authorized to transfer the cash (national or foreign currency) received as a result of the exchange of the convertible virtual asset within the scope of the service provided by the user in a non-cash form to the payment service provider, intermediary provider or acquirer (including the sub-acquirer) of the recipient included in the service scheme. In addition, it is also authorized to receive a commission/interest/benefit from the user within the scope of the services provided by him for the virtual asset he provides.

VASP registration 

So, the VASP is obliged to register with the National Bank of Georgia and meet the requirements established by it.

All that is required is to submit a fully filled VASP registration form (all Appendixes) and the relevant documents to the National Bank such as but not limited to:

  • a business plan (at least with the budget forecast for the next 3 years);
  • schematic description of the implementation of the virtual asset service;
  • documentation that confirms the right to use or own the real estate where the head office and branch/service center of the VASP will be located;
  • the internal instruction (policy-procedure) developed by the VASP for the implementation of the compliance control system, including the organizational risk assessment document for ML and TF.

The registration fee is 5000 GEL (approximately EUR 1715).

The National Bank, within 60 calendar days from the submission of the relevant registration information/documentation, makes a decision on the registration of the VASP or refusal to register. 

Requirements for VASP

Legislation of Georgia stipulates that the VASP must meet the following requirements (not exclusively):

  • it can only be a legal entity (limited liability company or joint-stock company) established and registered under Georgian legislation. The LLC in Georgia has no requirements for a minimum share capital. The joint-stock company minimum capital shall be GEL 100,000 (approximately EUR 34,304), 25% of which shall be contributed by the respective shareholders immediately upon incorporation;
  • the legal entity that has only 1 shareholder/partner who is also a director of this legal entity must have at least 2 directors;
  • VASPs should have an administrator – who is a member of the supervisory board of the VASP, a member of the directorate, as well as a person who is authorized to assume obligations on behalf of the VASP independently and/or together with one or more persons;
  • 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;
  • the VASP is obliged to place its head office in the territory of Georgia, from where its administrator(s) will carry out the actual management of the VASP’s activities;
  • it is obliged to implement the preventive measures specified in Article 10, paragraph 1 of Law of Georgia “On Facilitating Prevention of Money Laundering and Financing of Terrorism” in the presence of the following ground: in the case of concluding a one-time transaction related to the service of a convertible virtual asset – 1000 USD, 1000 EUR or 3000 GEL;
  • it is obliged to implement a software (electronic) system before starting the activity, which is proportional to the nature, volume, ML and TF risks associated with it and ensures the automatic detection of noteworthy/unusual transactions by processing the available information based on the distributed ledger technology.

Prohibitions for VASPs

Georgia has established such prohibitions for VASPs:

  1. It is not allowed to provide virtual asset services by a person who is not the VASP registered by the National Bank or a representative of the financial sector, who is authorized to provide virtual asset services by the activity regulatory legislation.
  2. VASPs are prohibited to provide virtual asset services through an agent.
  3. It is not allowed to lend virtual assets to physical persons.
  4. VASPs are prohibited from receiving commission, interest or any monetary or non-monetary benefits from anyone other than the user while managing the portfolio of convertible virtual assets.
  5. VASPs are prohibited from providing services with such a virtual asset (anonymity-enhanced coin/privacy coin) and/or using such technological methods/mechanisms that prevent the VASP from identifying and tracing information about the transaction and the parties involved in it in a distributed manner.

Georgian tax system on virtual assets

As for taxation of virtual assets, it is worth referring to the Public Decision No. 201 “On the taxation of operations for the supply of crypto-assets and computing speed (power) for its extraction” from June 28, 2019.

According to the Article 3 of the decision:

  1. supply of a crypto-asset by individuals (exchange of a crypto asset for national or foreign currency) is exempt from VAT;
  2. the income received by an individual from the supply of crypto-assets is exempt from income tax.

However, cryptocurrency companies must pay corporate tax on profits, including those earned abroad. Companies must pay a 15% tax on each transaction if they make a profit from it.

Also since January 1, 2017, Georgia has switched to the “Estonian model” of taxation, the essence of which is that only distributed profits are taxed. In this system, if a company decides not to pay dividends but to reinvest the profit received in the development of the company, it is not obliged to pay income tax.

In case the company is interested in tax benefits, consider setting up the company in Georgia’s free industrial zone (FIZ). The following are the main benefits:

  • Exemption from property tax for registered companies in FIZ Georgia
  • No VAT and import duties on goods imported into FIZ territory
  • No VAT on transactions between companies registered in FIZ
  • If the conditions stipulated by the Tax Code of Georgia are met, the company’s profits may be excluded from income tax
  • There are no restrictions on repatriation of capital

So, it is better to register the company in such FIZs as Tbilisi, Kutaisi or Poti to obtain privileges. 


In summary, VASPs in Georgia are an integral part of the rapidly evolving digital asset industry. Georgia, with its innovative spirit and desire to modernize, is focused on embracing cutting-edge technology while striving to ensure cryptocurrency security and legal compliance. The country not only recognises the potential that cryptocurrencies and blockchain hold, but is also improving its regulation to create an enabling environment for the industry.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.

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