Authorization for digital currencies is demanded to perform operations with crypto assets in the course of regular professional activities. Today’s material describes the features of cryptocurrency regulation, as well as the requirements that should be met by those who intend to obtain a license for crypto activities in Georgia.
Laws in Georgia regarding crypto
Georgia is considered a promising destination for foreign investors interested in starting a crypto business. The country’s legal framework does not have specific regulatory restrictions regarding crypto exchanges. Companies that offer services related to crypto assets classified as securities or having the characteristics of securities must obtain a financial license in Georgia and are subject to supervision by the country’s financial regulators.
On June 28, 2019, a law regulating the taxation of digital money came into force in Georgia. Due to the growing interest in cryptocurrencies, the Georgian Tax Service has published a public decision on the taxation of cryptocurrencies and the provision of operations on the speed of computing (power).
The public decision explains:
- Taxation of VAT on the supply of crypto assets (exchange operation in national or foreign currency);
- Taxation of income received as a result of the supply of crypto assets;
- VAT taxation of the estimated speed (capacity) of the delivery operation to receive a crypto-asset and the issue of deducting the amount of VAT on goods/services purchased for the specified delivery operation.
For the purposes of this public decision, a crypto asset is considered as a digital asset that is stored and exchanged electronically through a single decentralized peer-to-peer network, does not require a trusted intermediary, and works with distributed ledger technology (distributed ledger software). If you intend to obtain a crypto license in Georgia, it is worth considering that according to the application, a crypto asset is a digital expression of value, it is issued and exchanged through a decentralized consensus mechanism, without a central trustworthy issuer and supervisory/controlling authority, and ownership of it is confirmed by cryptographic methods .
How to obtain a crypto license in Georgia: Where to open a cryptocurrency company in Georgia?
Each unit of digital currency has a market value, it can be issued, owned, transferred to another and divided into parts, as well as bought and sold. At the same time, crypto assets are not legal tender, like electronic money in accordance with the legislation of Georgia.
The regulatory framework of Georgia does not provide a legal definition of crypto or digital currency. In a report by the European Central Bank published in February 2015, a digital currency is defined as a digital expression of value not issued by a central bank, credit or electronic money issuer, which in some cases can be used as an alternative means of payment. The Ministry of Finance of Georgia shares the above definition of a digital currency set by the ECB, which also includes crypto assets. If you intend to register a crypto exchanger in Georgia, it is important to consider that in the country it is possible to exchange digital currencies for other cryptoassets, transactions for the purchase of goods and services (crypto in such cases is actually used as a means of payment). It is also possible to exchange crypto assets for national or foreign currency.
Features of obtaining a crypto license in Georgia
Country offers an international financial company license for individuals wishing to offer financial services. Licensing in the financial sector is the responsibility of the state body, the Ministry of Finance.
Opening a license for digital money provide the company to offer a range of services, which includes:
- Asset Management;
- Broker services and trading in the foreign exchange market;
- Crowdfunding and registration of crowdfunding platforms;
- Operations with e-money;
- Portfolio management services;
- Registration of a crypto exchange in Georgia and the provision of trading services;
- Conducting Initial Coin Offerings (ICOs);
- Consulting on investment activity.
- Although Georgia is not part of the European Union, it has adopted many European laws while maintaining its own local laws to stimulate its financial sector.
Requirements Georgia cryptocurrency business set up
Obtaining a financial license that allows you to conduct cryptocurrencies in the country is characterized by a number of advantages. If you intend to get a crypto license in Georgia, you should take into account that starting a business in the field of cryptocurrencies in this jurisdiction has the following features and advantages:
- The country is strategically located between East and West;
- Georgia has a good reputation in the international arena;
- The state is not part of the OECD or the EU and, therefore, has its own requirements for issuers, which differ in some degree of flexibility;
- Modern financial and banking sector;
- Minimum requirements for a local office and director;
- Strict privacy controls;
- Favorable tax rates;
- A local director is not required;
- Availability of free zones in which a loyal regulatory regime operates and it is possible to obtain a license from the Georgian Free Economic Zone.
Georgian financial license is valid only on the territory of the country.
In order to obtain a cryptocurrency in Georgia, you will need to register a local business and submit an appropriate license application. In order to go through the procedure for obtaining a permit, you must submit an application with documents. The list includes, in particular:
- Extract from the state register;
- A document confirming the payment of the state duty;
- Confirmation of the absence of a criminal record;
- Information about the applicant and supporting documents;
- Financial statements for the last six months;
- Capital information.
Procedure of opening
It is believed that the PSP license in Georgia allows companies to act as a payment service provider also in cryptocurrency. According to the law, all licensed Georgian companies operating in the field of electronic finance have the authority to:
- providing services related to investing in cryptocurrency;
- issuing their tokens for subsequent sale and holding an ICO in Georgia;
- registering a crypto exchanger in Georgia and providing services for the exchange of digital money for FIAT or other cryptocurrencies.
A crypto license in Georgia gives broad powers to carry out transactions with cryptocurrencies, which includes:
- cryptoactive transfer;
- making payments;
- debiting and crediting funds.
- Getting a cryptolicense is available to organizations registered as LLC or JSC. There are no requirements for the citizenship of the founder, the presence of a physical office (the use of a virtual office is allowed).
Taxation
Until recently, the Georgian state authorities did not influence the circulation of fiat money in any way. Several times, representatives of the National Bank of the country have stated that it is necessary to be careful with cryptocurrency, as it is not legal tender. But that’s where it all ended. In Georgia, currency mining has remained a popular source of income, employing at least 200,000 people (World Bank data for 2018).
