Cryptolicense in Georgia: From Legislation to Practice

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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 months

average term of obtaining a cryptolicense

15%

corporate income tax (CIT) rate

~€1,700

registration fee for obtaining a cryptolicense (GEL 5,000)

5%

dividend tax rate

no

requirement for a minimum share capital for LLC

no

value added tax (VAT)

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Ganna Voievodina

Manimama

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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."

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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.

Management services

cryptolicense holders are enabled to manage a portfolio of convertible virtual assets (excluding collective portfolio management).

Administration services

licensees can administer a convertible virtual asset trading platform.

ICO services

cryptolicense holders are authorized to conduct ICO of convertible virtual asset and/or service related to ICO.

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.

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.

Lending services

holders of cryptolicense may provide lending of convertible virtual assets. But they are not allowed to lend them to physical persons.

Benefits of Obtaining a Cryptolicense in Georgia

Ease and speed of obtaining a cryptolicense:

  • Compared to other countries, the process of obtaining a cryptolicense in this country is relatively simple and fast.
  • Minimal bureaucratic hurdles and efficient work of government agencies speed up the opening of a business.

Low tax rates:

  • Georgia provides a favorable tax regime for cryptocurrency companies, which allows to significantly reduce tax costs.
  • Due to the absence of VAT on cryptocurrency transactions, the cost of services and products for end users can be reduced.

Ensuring security and legality of crypto projects:

  • Having a Georgian license guarantees the safety and legal clarity of cryptocurrency transactions. This clarity strengthens the position of companies in their dealings with regulators, monetary institutions and others.
  • This legal certainty protects companies from any legal issues arising from changes in legislation and establishes them as true players in the virtual asset market.

Expansion into international markets:

  • The country is actively forming an international hub for crypto businesses, which opens up access to global markets and partners.
  • Its geographical location at the crossroads of Europe and Asia facilitates international operations and business expansion.

Economic benefits:

  • The cost of applying for a cryptolicense is only 5000 GEL, which is an incredibly low fee compared to other countries.
  • There is no annual license renewal fee in Georgia.

Investor appeal:

  • Companies with a license attract more investors due to transparency and regulatory compliance.
  • The country offers a number of government programs and grants to support technology startups, which can be useful for cryptocurrency projects.
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Our Services

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
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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

  1. Step 1. Initial setup

    Collection of necessary documents:

  2. Preferred company name
  3. Power of attorney
  4. Passport copies from all shareholders and directors
  5. Utility bills from all shareholders and directors
  6. CVs of shareholders and directors
  7. Business plan
  8. Source of funds confirmation
  9. 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
  10. 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)
  11. 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.)
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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.

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          Frequently Asked Questions

          • 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.
          • 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.
          • 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.
          • 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.
          • Can foreigners apply for a cryptolicense in Georgia?
            Yes, foreigners are eligible to apply if they meet all regulatory requirements.
          • What is the minimum amount of capital for an LLC that will receive a license?
            There is no such minimum.
          • 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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