Georgia is actively working on establishing regulatory frameworks to govern the use of cryptocurrencies in the country. For crypto exchanges, the framework will include licensing, compliance testing, and anti-money laundering (AML) standards.
During an interview with The Financial, Koba Gvenetadze, the Governor of the National Bank of Georgia (NBG), revealed the move.
The NBG intends to control the cryptocurrency industry in Georgia, according to the report. They have created an initial draft of the relevant legislative modifications in compliance with the standards of the Financial Action Task Force in this regard. They are also aided in the construction of this regulatory framework by staff from the International Monetary Fund (IMF). Registration / licensing, compliance testing, and AML control requirements for crypto market operators are among the draft legislative revisions at this level.
He emphasized that banks and other financial institutions are not permitted to provide cryptocurrency services. Financial institutions will also classify individuals who invest in digital assets as high-risk consumers, with the institution offering them protection against the asset class.
Moreover, because cryptocurrency is not regulated in Georgia, Gvenetadze pointed out that there is no precise statistics on the quantity of cryptocurrency trade in the nation.
However, he cited the fifth Round Mutual Evaluation Report of Georgia, which was released in September 2020 by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, MONEYVAL, and suggests that monthly crypto trading volume is between $1.1 million and $1.6 million.
Georgia has been a popular destination for bitcoin mining companies due to its low regulation and cheap energy. Bitfury, one of the industry’s top Bitcoin mining companies, is based there.
Over 3.9 million Georgians are interested in crypto mining, according to a new survey by Arcane Research. However, according to the research, the country only provides 0.18 percent of Bitcoin’s overall hashrate.
According to the research, Georgia has a low tax policy for Bitcoin miners, with a 0% tax rate for Bitcoin miners, a 15% IT tax, and an 18% VAT rate for corporate miners.
While Georgia has no cryptocurrency rules, other countries have begun to regulate the new asset class.
The Bank of England (BOE) published its first regulatory framework for digital assets last month in an attempt to prevent them from being exploited to circumvent financial sanctions.