In the context of Georgia’s growing engagement with virtual assets, the legal framework governing their registration and licensing is of great importance.
Virtual assets, defined as digital representations of value that are interchangeable and not unique, are primarily used for investment or payment purposes. These assets do not encompass digital representations of currency, securities, or other financial instruments.
With the increasing use of virtual assets in financial transactions, Georgia’s regulatory environment has evolved, setting out clear guidelines for virtual asset service providers.
Virtual Asset Registration Requirements
The regulation of virtual assets in Georgia is governed by the National Bank of Georgia (NBG) under the directive issued by the NBG President on June 13, 2023 (Order N94/04). According to this regulation, any entity wishing to operate as a virtual asset service provider must submit detailed documentation to the NBG, as outlined in Article 3 of the directive.
Key documents required include:
- Application Form: A completed registration form for virtual asset service providers (Appendix 1).
- Service List: A list of services to be provided by the applicant related to virtual assets (Appendix 2).
- Information on Administrators: Detailed information about each administrator managing the virtual asset services (Appendix 3).
- Ownership Information: Disclosure of all direct or indirect, as well as beneficiary owners holding significant shares (Appendix 4).
- Documentation Verification: A compliance checklist for the provided documentation (Appendix 5).
Additional documentation includes details on shareholder ownership, personal identification, and business activity history, as well as criminal records for the last 10 years, if applicable. Any organization seeking registration must also submit financial and operational plans, including a business forecast for the next three years.
The Registration Process and Timeline
Once all necessary documents have been submitted, the NBG has 60 calendar days to review the application and make a decision on registration.
The process can be extended twice, for 60 days each time, and applicants are notified accordingly.
If any deficiencies are found during the document review, the NBG may issue a notice, allowing the applicant 30 calendar days to rectify the issues.
Regulatory Fees
Under Georgian law, specifically Article 7 of the “Law on Registration Fees,” a registration fee of 5,000 GEL applies to entities applying for registration as virtual asset service providers.
Compliance with Anti-Money Laundering and Counter-Terrorism Financing Regulations
A critical aspect of virtual asset service regulation is compliance with Georgia’s anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks. Virtual asset service providers must implement internal control systems designed to prevent illegal activities such as money laundering or terrorist financing. This includes organizational risk assessments and detailed policies to mitigate such risks. Failure to adhere to these requirements could lead to registration denial or regulatory penalties.
The process can be complex and involves navigating various regulatory requirements, but you don’t have to do it alone. Our law firm is here to provide expert guidance throughout every stage of the licensing process.
