DISCLAIMER: In this text, the term "cryptolicense" refers to a virtual asset service provider (VASP) license. The use of the term "cryptolicense" is intended solely to simplify the text for the customers and visitors of the website.
Georgia has recently been one of the main centers of cryptocurrency activity in Eastern Europe. The legislative and economic framework in this country favors the development of blockchain technology and cryptocurrencies. Thus, in 2023, the Georgian government - took an active stance in regulating this dynamic sector and already since July 1, 2023, Decree No. 94/04 "Rules for registration of virtual asset service provider with the National Bank of Georgia, cancellation of registration and regulation" (Decree No. 94/04) has been in force in this jurisdiction. Consequently, all companies that want to engage in cryptocurrency activities must now obtain a cryptolicense. This step demonstrates the state's desire to provide a safe and regulated environment for this line of business.
This jurisdiction does not recognize cryptocurrency as an official means of payment, but at the same time it supports the development of this type of activity in the country.
According to Georgian legislation, in order to carry out activities with virtual assets, a cryptolicense must be obtained from the National Bank of Georgia
Key Numbers about Cryptolicense in Georgia
up to 4-5 monthsaverage term of obtaining a cryptolicense |
15%corporate income tax (CIT) rate |
~€1,700registration fee for obtaining a cryptolicense (GEL 5,000) |
5%dividend tax rate |
norequirement for a minimum share capital for LLC |
novalue added tax (VAT) |
Legal Opinion about Cryptolicense in Georgia
Ganna Voievodina
Manimama, CEO
"Getting a cryptocurrency license in Georgia is a profitable decision for your business. This country has become an attractive place for crypto business due to good regulation, favorable tax policy and strategic geographical location. If you are interested in obtaining this license in Georgia, we at Manimama are ready to provide you with legal assistance in this matter."
Types of Activities with License in Georgia
Exchange services: licensees are authorized to do 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.
Administration services: licensees can administer a convertible virtual asset trading platform.
Transfer of convertible virtual assets: holders of cryptolicense are authorized to facilitate the secure transfer of convertible virtual assets from clients' wallets to designated third-party wallets, presenting an alternative to traditional fiat wire transfers.
Lending services: holders of cryptolicense may provide lending of convertible virtual assets. But they are not allowed to lend them to physical persons.
Management services: cryptolicense holders are enabled to manage a portfolio of convertible virtual assets (excluding collective portfolio management).
ICO services: cryptolicense holders are authorized to conduct ICO of convertible virtual asset and/or service related to ICO.
Safekeeping and/or administration of convertible virtual assets or of the instrument enabling control over virtual assets: cryptolicense holders can securely store and manage virtual assets on behalf of individuals or entities, or provide services that enable persons to maintain control over them.
Benefits of Obtaining a Cryptolicense in Georgia
Choose the Package of Services
Popular package
Premium
Full list of necessary services to set up of the VASP with connection to KYC providers, C2B account for the crypto transactions
- Company formation in Georgia
- Individual AML/KYC policies
- Application for a cryptolicense
- Opening C2B account for crypto activities
- Search, integration, direct employment agreement with local director
- KYC/KYT integration and provider principle adaptation
Advanced
Set up of company ready to start cryptocurrency operational activity
- Company formation in Georgia
- Individual AML/KYC policies
- Application for a cryptolicense
- Opening C2B account for crypto activities
Basic
Creating the company and registration of VASP
- Company formation in Georgia
- Standard AML/KYC policies
- Application for a cryptolicense
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Step by Step Description
Step 1. Initial setup
Collection of necessary documents:
Step 2. Company registration
- Preparation of corporate documents
- Registration of the company in the National Agency of Public Registry of the Ministry of Justice of Georgia
- Set up of accounting services
Step 3. Obtaining of the cryptolicense
- Collection/preparation of all accompanying documents for getting the cryptolicense
- Submission of the filled registration form and the relevant documents to the NBG
- State fee payment - GEL 5,000 (~ €1,747)
Step 4. Opening C2B account for crypto activities (execute simultaneously with Step 3)
- Review of the most suitable banks/EMIs, comparison of the bank's risk appetite with the client's risk appetite on the basis of previously prepared AML policies
- Collection of required documents from the client to start the process (source of wealth, flow of funds, description of purpose of account opening, key partners, company website, utility bill, etc.)
Understanding the Requirements in Georgia
Order No. 94/04 contains a full list of requirements for those who wish to obtain a cryptolicense
The Order No. 94/04 specifies the registration requirements such as “Fit & Proper” criteria for administrators and for the direct/indirect significant share owners (incl. beneficial owners) of the entity, requirements of the head office, branches, self-service kiosks, software systems and requirements related to AML/CFT that should be met at the application stage, also other obligations that should be fulfilled after registration.
The requirements of this Order apply to those persons who are required to register with the National Bank or who wish to carry out crypto activity in the future.
Requirements for Obtaining a cryptolicense in Georgia
VASP is characterized as a legal entity (LLC or JSC) that must comply with AML requirements and have its head office in Georgia
Under Georgia law, a VASP must meet the following requirements (not limited to):
- it can only be a legal entity: limited liability company (LLC) (no requirement for a minimum share capital) or joint-stock company (JSC) (minimum capital shall be GEL 100,000 (~ €34,947), 25% of which shall be contributed by the respective shareholders immediately upon incorporation)
- a legal entity with only 1 shareholder/partner who is also a director of that legal entity must have at least 2 directors; it is prohibited to be a director of two VASPs at the same time (unless they are part of the same group of companies)
- an administrator as well as holder/beneficial owner of a significant shareholding (more than 10%) shall meet the relevant fit and proper criteria
- 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
- it must 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 case of concluding a one-time transaction related to the service of a convertible virtual asset - $1,000, €1,000 or GEL 3,000
- it must implement a compliance control system before starting the activity and appointment of a person to oversee and ensure the effectiveness of the compliance control system
- 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 DLT
Taxes in Georgia
The country has a favorable taxation system and offers doing business in FIZs
The company is obliged to pay corporate tax on profits, including those earned abroad. Thus, 15% is a tax rate on each transaction if they make a profit from it.
Dividend tax rate is 5%.
On January 1, 2017, Georgia adopted the "Estonian model" of taxation, the point of which is that only distributed profits are taxed. Within this system, if a legal entity 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 legal entity is interested in tax benefits, consider setting up the company in Georgia's free industrial zone (FIZs). The following are the main benefits:
- exemption from property tax for registered companies in FIZs
- no VAT and import duties on goods imported into FIZs territory
- no VAT on transactions between companies registered in FIZs
- 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, Hualing Kutaisi or Poti to obtain privileges.
Frequently Asked Questions
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Why should you choose Georgia to obtain a cryptolicense?The country is known for its pleasant business climate, support for crypto businesses and competitive tax rates.
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Does the Georgian jurisdiction regulate virtual asset services?Yes, the legislative framework, in particular, establishes a mandatory registration regime for VASPs with the National Bank, eligibility criteria for its managers, and a framework for AML/CFT supervision.
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Who needs a cryptolicense in Georgia?Any business engaging in crypto activities such as trading, exchanging or storing virtual assets in Georgia requires a license.
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What are the main requirements to get a Georgian cryptolicense?Basically, the requirements include registration of a Georgian company, compliance with AML/KYC requirements, financial solvency and having a local office.
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Can foreigners apply for a cryptolicense in Georgia?Yes, foreigners are eligible to apply if they meet all regulatory requirements.
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What is the minimum amount of capital for an LLC that will receive a license?There is no such minimum.
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Are there any tax benefits for cryptocurrency business in this country?The state offers favorable tax conditions, such as 0% tax on reinvested profits.
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