Georgia definitely welcomes overseas cryptocurrency dealers, and the latter rush to this Caucasian state with soft legislation, attractive tax conditions, and liberal authorities. What’s more, not so long ago, the crypto industry there existed absolutely unregulated by the authorities. Only in 2023 did the government finally dare to somehow “disturb” crypto entrepreneurs by clamping down on this activity to some extent.
The VASP that is the Law on Virtual Asset Service Provider has made unlicensed crypto activity impossible in Georgia since July 2023. So, if you intend to deal with digital coins in that country, bother to get a corresponding license. Once you cope with it, you will be officially allowed to legally sell and buy digital coins, and also provide crypto wallet services to clients.
Advantages of running crypto firms in Georgia
This country ensures cozy environment for foreign miners. If you decide to run a crypto undertaking in this country, you may count on the following benefits:
- Low electricity prices favor intense mining: On a monthly basis, crypto transactions worth about $1.6m take place there.
- Attractive taxes for crypto entrepreneurs: If your firm doesn’t pay dividends while investing in corporate development, you don’t need to pay income tax.
- No minimum authorized capital: To register a company you don’t require a minimum authorized capital in this country. Here you are free to start your crypto undertaking literally with any sum. Needless to say such a generous attitude to medium as well as small firms favors a rapid development of the Georgian economy and becomes a target for many foreign investors.
- Getting a crypto license instantly: Bureaucracy is not about this country. Here it won’t take you much time to get a corresponding license to operate in this sector. Approximately, you should cope with this for about three months or even faster compared to exhausting terms in other jurisdictions that often exceed a year. So, Georgia allows to save your precious time and get down to mining as soon as possible.
- An affordable license cost: A crypto license here won’t rip you off. It’s strikingly affordable contrary to many other countries.
When applying for the VASP license, you require specifying the activities from the list above you intend to pursue in the corresponding appendix of the online application form.
Starting a crypto firm in Georgia
It would be logical to start a firm in this country before getting down to making money on cryptos. The so-called Free Industrial Zone is considered to be the best place in terms of taxes as well as other conditions. As told above, you don’t require an obligatory authorized amount, although you require providing a business plan that should be fairly realistic.
If you manage to gather all the necessary docs, your crypto business can be licensed fast. However, if you are struggling to cope with this on your own for some reason, it is possible to opt for professional assistance.
Two different crypto authorizations in Georgia
In this Caucasian country, you may choose between two different cryptocurrency authorizations. These are the Tbilisi Free Zone license or FIZ for short and the mainland VASP one. Certainly, they both have their own pros and cons.
VASP
This license permits the following crypto activities:
- Portfolio management of convertible digital coins
- Exchange between fiat funds and convertible digital coins, exchange between several digital coins, and finally exchange between various financial instruments and cryptos
- The initial offering of convertible cryptos
- Crypto transfers
- Lending of various convertible crypto assets (the VASP license doesn’t permit to lend non-convertible digital coins)
- Administration of cryptocurrency trading platforms
Well, on the one hand, it’s no problem to get your firm VASP licensed and then earn good money, but on the other hand, this scheme brings a slew of inconveniences, to say nothing of extra costs. In particular, in addition to a licensing fee, you are also expected to face a license renewal fee (following the first operational year), and an incorporation fee, to say nothing of taxes. Other inconveniences include AML-CFT compliance training for your staff members and security audits.
By the way, under this scheme, your income tax will amount to 15%. It doesn’t sound very attractive, especially considering it’s quite possible to run your crypto business with a 0% tax rate. All you need to do is to stick with the Tbilisi Free Zone authorization.
FIZ
As the name suggests, this license has to do with a free zone. Some crypto entrepreneurs don’t find free zones fairly suitable places for their firms. It has some sense because as a rule free zones cater to industrial as well as logistics firms. Nevertheless, the Tbilisi Free Zone license can be an optimal choice for you. After all, you can greatly optimize your expenses with a FIZ license.
The Tbilisi Free Industrial Zone in Georgia happens to be a special economic region with its own regulatory and tax regime specially designed to attract innovative companies, including those specializing in blockchain products and services.
What you will see there greatly differs from mainland Georgia with its VASP license. FIZ-licensed cryptocurrency businesses can enjoy a tax-free policy, not to mention the absence of strict rules.
The main indisputable advantage of this free zone compared to conditions offered by the country’s mainland license is striking cost efficiency. Affordable operation costs welcome energy-intensive operations such as mining. When you have a good opportunity to save on electricity, you have great freedom as a miner and it gives you a great competitive advantage over your rivals. Other benefits include cheaper licensing and renewal fees, in addition to a no-share capital requirement.
