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Disclaimer: The regulatory information provided below is for general informational purposes only and may not reflect the most current legal developments. Cryptocurrency regulations are rapidly evolving and can change frequently. This information should not be considered legal or tax advice. Before making any business or investment decisions, please consult with qualified legal, tax, or financial professionals familiar with your specific jurisdiction and circumstances. Always verify current regulations with official government sources and regulatory bodies.

Legal Classification & Regulatory Framework

Cryptocurrency Status

Georgia has established itself as one of the more crypto-friendly jurisdictions globally, offering a clear regulatory framework that balances innovation with financial oversight. Under Georgian law, cryptocurrencies are not recognized as legal tender—the Georgian Lari (GEL) remains the only official currency for transactions in the country. However, owning, trading, and exchanging virtual assets is fully legal and permitted for both individuals and businesses.

The legal framework defines a virtual asset as a digital representation of value that is interchangeable and non-unique, can be digitally traded or transferred, and can be used for investment or payment purposes. Importantly, this definition explicitly excludes digital representations of fiat currencies, securities, and other financial instruments, as well as non-fungible tokens (NFTs) and collectibles, which fall outside the scope of virtual asset regulations.

While cryptocurrencies cannot be used directly as a means of payment in Georgia, licensed Virtual Asset Service Providers (VASPs) can facilitate transactions by converting crypto assets to fiat currency on behalf of customers, enabling practical use of digital assets in everyday commerce.

Tax Treatment

Georgia offers one of the most favorable tax regimes for cryptocurrency globally, particularly for individual investors:

For Individuals: Georgian tax law applies personal income tax only to income sourced within Georgia. Since cryptocurrencies have no physical form and are not tied to a specific geographical location, profits from crypto trading and exchange are considered foreign-source income. As a result, Georgian tax residents enjoy a 0% tax rate on cryptocurrency gains. This treatment applies to buying, selling, and exchanging crypto assets held as personal investments rather than as part of business activities. To qualify, individuals must be Georgian tax residents, typically achieved by spending at least 183 days in the country within a 12-month period or through the High Net Worth Individual (HNWI) program.

For Businesses: Georgian companies engaged in cryptocurrency activities are subject to the standard corporate tax framework. Georgia follows the Estonian-style corporate tax model, meaning profits are taxed only upon distribution rather than when earned. The corporate income tax rate is 15% on distributed profits, with an additional 5% withholding tax on dividends. Companies can defer taxation indefinitely by reinvesting profits back into the business. For cryptocurrency mining operations, the same tax rules apply, though companies operating in Free Industrial Zones (FIZ) may qualify for additional tax exemptions, including income tax relief.

VAT Treatment: The exchange of cryptocurrencies into national or foreign currencies is not subject to Value Added Tax (VAT). Since crypto assets are treated similarly to monetary funds for VAT purposes, common activities such as buying, selling, or exchanging cryptocurrencies are VAT-exempt. Financial operations provided by VASPs are generally exempt from VAT without the right of deduction, meaning providers cannot claim input VAT credits on related expenses.

Georgia also offers Small Business Status (SBS) with a preferential 1% turnover tax for qualifying businesses, though the applicability to cryptocurrency trading activities remains subject to interpretation by the National Bank of Georgia.

Regulatory Oversight

Georgia’s cryptocurrency sector is governed by a multi-agency regulatory structure that came into effect with comprehensive legislative changes in 2023:

National Bank of Georgia (NBG): The NBG serves as the primary supervisor for Virtual Asset Service Providers. It handles official registration and licensing, establishes eligibility criteria for VASP administrators, and ensures compliance with the VASP Registration Procedure law. The NBG has broad powers to oversee VASP activities, impose fines for violations, suspend operations, or revoke registrations when necessary.

Financial Monitoring Service of Georgia (FMS): As the country’s central financial intelligence unit established in 2003 and significantly strengthened in 2019, the FMS is responsible for combating money laundering and terrorism financing across all financial institutions, including crypto firms. It receives and analyzes suspicious transaction reports, enforces the national AML/CFT law, and requires organizations to implement compliance programs and report suspicious activities.

Ministry of Finance: This ministry establishes the tax framework for cryptocurrency, determining how profits and transactions are treated for tax purposes. It also supervises certain non-bank entities under the national AML law.

The regulatory framework aligns with Financial Action Task Force (FATF) recommendations, and Georgia received compliance confirmation from the Council of Europe’s MONEYVAL body, demonstrating the country’s commitment to international anti-money laundering standards.

Business Environment

Banking Relationships

Georgian banks have generally adopted a cooperative approach toward cryptocurrency businesses, though with appropriate due diligence requirements. Major banks including Liberty Bank, Bank of Georgia, and TBC Bank work with blockchain companies and process crypto-related transactions. Licensed VASPs can establish corporate banking relationships and process fiat transactions related to their crypto operations.

For individuals and businesses receiving funds from cryptocurrency exchanges, the key factor determining smooth banking relationships is the source of funds. Transfers from licensed VASPs registered with the National Bank of Georgia are typically processed without issue, as banks recognize these as verified counterparties operating within NBG regulations. However, transfers from peer-to-peer platforms or unlicensed exchanges may trigger enhanced scrutiny, and banks may request documentation proving the legitimate source of funds.

Opening a bank account for crypto-related activities is a standard part of the VASP registration process, and multiple banks actively service the crypto industry. The regulatory clarity provided by the VASP framework has helped normalize banking relationships for compliant crypto businesses.

Licensing Requirements

Since the implementation of the Law on Virtual Asset Service Provider Registration Procedure, all companies engaging in virtual asset services must register with the National Bank of Georgia. The VASP registration covers a comprehensive range of activities:

• Exchange services between crypto and fiat currencies, between different cryptocurrencies, or between crypto and financial instruments (including through kiosks/ATMs)
• Transfer services for virtual assets
• Safekeeping and administration of virtual assets or instruments enabling control over them
• Portfolio management of virtual assets (excluding collective portfolio management)
• Administration of cryptocurrency trading platforms
• Initial Coin Offerings (ICOs) and related services

Registration Requirements: Applicants must be legal entities registered in Georgia (LLC or Joint Stock Company), maintain a local office and at least one local director, demonstrate compliance with AML/KYC requirements, and meet fit-and-proper criteria for administrators and significant shareholders. Required documentation includes a detailed business plan with minimum three-year budget forecasts, AML/CFT policies and procedures, technical documentation covering data security and payment processing systems, and information about ownership structure and beneficial owners.

Process and Fees: The government registration fee is 5,000 GEL (approximately US$2,000). The NBG reviews applications within 2-4 months, with the timeline potentially extended for additional information requests. There is no minimum capital requirement for setting up a VASP in Georgia.

Important Exemptions: Individual cryptocurrency miners, participants in mining pools, and individual traders are explicitly exempt from VASP registration requirements. This exemption recognizes the distinction between professional service providers and individual participants in the crypto ecosystem.

Compliance Obligations: Registered VASPs must submit regular reports to the NBG including annual financial reports, customer verification records, suspicious transaction reports, and transaction volume data. VASPs are prohibited from working with anonymity-enhanced or privacy coins and must implement technological measures that prevent concealment of transaction parties.

Innovation Support

Georgia has actively positioned itself as a hub for blockchain and cryptocurrency innovation through various government initiatives:

Georgia’s Innovation and Technology Agency (GITA): Operating under the Ministry of Economy and Sustainable Development, GITA provides grants of up to 150,000 GEL for blockchain and technology companies. The agency operates technology parks across the country offering free office space, co-working facilities, and access to advanced prototyping equipment through its FabLab network. GITA has supported over 400 startups and signed memoranda of understanding with major blockchain industry players.

Free Industrial Zones (FIZ): Companies operating in designated zones benefit from significant tax advantages, including exemption from income tax on certain activities. These zones are particularly attractive for cryptocurrency mining operations and technology companies serving international markets.

Free Virtual Zone: Georgia offers a regulatory framework allowing technology startups exporting products from Georgia to benefit from 0% corporate tax and 0% VAT with no annual license fees. IT companies can access reduced income tax rates of 5%.

Public Sector Blockchain Adoption: Georgia has been a pioneer in government blockchain implementation. The Public Service Hall, managing the State Registry for Land Registration, implemented blockchain-based registration procedures. The National Bank of Georgia has partnered with Ripple to pilot the Digital GEL, Georgia’s proposed central bank digital currency, demonstrating government commitment to blockchain technology integration.

Strategic Partnerships: Georgia has signed a government-level memorandum of understanding with Tether to develop blockchain infrastructure and establish a startup fund, signaling strong public-private collaboration in the crypto sector.

Market Characteristics

Adoption Patterns

Georgia has developed a notable cryptocurrency ecosystem driven by several unique factors. The country has emerged as a significant player in cryptocurrency mining, benefiting from low electricity costs and a favorable regulatory environment for mining activities. This has attracted both individual miners and large-scale mining operations to establish facilities in the country.

Consumer adoption continues to grow, supported by the tax-free treatment of individual crypto gains and increasing access to licensed exchange services. The country has developed a network of cryptocurrency ATMs and kiosks, with a notably high density relative to GDP. Multiple licensed exchanges and exchange services operate within the country, providing residents with straightforward access to buying, selling, and converting cryptocurrencies.

The presence of a growing community of digital nomads, remote workers, and international professionals attracted by Georgia’s favorable tax treatment and low cost of living has further accelerated cryptocurrency adoption. Many of these individuals receive compensation or conduct business in cryptocurrencies, benefiting from the clear regulatory framework for personal crypto activities.

Industry Focus

Several types of cryptocurrency businesses have found Georgia particularly attractive:

Cryptocurrency Mining: Georgia’s competitive electricity rates and supportive regulatory environment have made it a global destination for mining operations. The country has developed significant mining infrastructure, with many international companies establishing operations.

Licensed Exchanges and Exchange Services: Multiple international and local cryptocurrency exchanges have obtained VASP registration in Georgia, including major platforms. These services facilitate crypto-to-fiat conversion, trading, and custody services for both local and international customers.

Fintech and Blockchain Startups: The combination of government support through GITA, favorable tax treatment, and access to regional markets has attracted blockchain startups across various sectors including DeFi, payment solutions, and enterprise blockchain applications.

Custody and Wallet Services: The clear regulatory framework for virtual asset safekeeping has enabled the development of custody services catering to institutional and individual clients.

Regulatory Evolution

Georgia’s approach to cryptocurrency regulation has evolved significantly from a largely unregulated environment to a comprehensive framework aligned with international standards:

The initial regulatory clarification came through tax guidance establishing the favorable treatment of individual crypto gains. This was followed by the implementation of comprehensive VASP regulations aligning Georgia with FATF recommendations and international AML/CFT standards. The regulatory framework draws inspiration from the EU’s Markets in Crypto-Assets (MiCA) regulation, creating a familiar compliance environment for international businesses.

While Georgia is not an EU member state, its regulatory approach demonstrates alignment with European standards as part of broader economic and legal harmonization efforts. The country has received recognition from MONEYVAL for its compliance with international anti-money laundering standards, providing confidence in the regulatory framework’s robustness.

The regulatory environment continues to develop, with the National Bank of Georgia actively reviewing applications and providing ongoing guidance to the industry. The government has demonstrated flexibility in engaging with the crypto industry while maintaining commitment to preventing financial crime and protecting consumers.

Looking forward, Georgia’s strategic position at the crossroads of Europe and Asia, combined with its established regulatory framework and government support for innovation, positions the country as an increasingly attractive jurisdiction for cryptocurrency businesses seeking clear regulatory guidance and favorable operating conditions.

For Current Information:

• National Bank of Georgia (NBG) – VASP Registration and Supervision: https://nbg.gov.ge
• Financial Monitoring Service of Georgia (FMS) – AML/CFT Compliance: https://fms.gov.ge
• Ministry of Finance of Georgia – Tax Framework: https://www.mof.ge
• Georgia’s Innovation and Technology Agency (GITA) – Startup Support: https://gita.gov.ge