Quick Answer
Yes, cryptocurrency is legal in the country of Georgia.
- It is not legal tender; only the Georgian Lari is.
- Crypto firms must register as Virtual Asset Service Providers (VASPs).
Legal Status of Crypto in Georgia
Cryptocurrency is legal in Georgia, operating within a defined regulatory framework rather than a legal gray area. While not recognized as legal tender, the government has established laws to support the industry's development while mitigating risks associated with financial crime. This regulatory structure requires crypto firms, known as Virtual Asset Service Providers (VASPs), to register with the National Bank of Georgia and adhere to strict anti-money laundering obligations.
Current Regulations
As of July 1, 2023, Georgia's crypto landscape is governed by the VASP Registration Procedure law. This legislation mandates that all companies involved in virtual currency activities must register with the National Bank of Georgia and comply with strict AML/KYC rules. These regulations were introduced to align with Financial Action Task Force (FATF) recommendations and prevent illicit financial activities, though cryptocurrency itself is not considered legal tender.
Regulatory Authorities
Several regulatory bodies in Georgia share the responsibility of overseeing and enforcing cryptocurrency regulations.
- National Bank of Georgia (NBG): The NBG is the primary supervisor for Virtual Asset Service Providers (VASPs), handling their official registration and licensing. It ensures these crypto firms comply with the VASP Registration Procedure law and its associated AML/KYC requirements.
- Financial Monitoring Service of Georgia (FMS): As the country's central financial intelligence unit, the FMS is responsible for combating money laundering and terrorism financing across all financial institutions, including crypto firms. It enforces the national AML/CFT law, requiring organizations to implement compliance programs and report suspicious activities.
- Ministry of Finance: This ministry is responsible for establishing the tax framework for cryptocurrency, outlining how profits and transactions are treated for tax purposes. Under the national AML law, it also supervises certain non-bank entities, such as lottery organizers and traders of precious metals.
Historical Context
Initially, Georgia’s crypto sector operated without specific government regulation, attracting miners and traders. The first formal step came on June 28, 2019, when a bill on taxation exempted individuals from income tax on crypto profits, solidifying its tax-friendly status. A major policy shift occurred in early 2023, introducing a comprehensive legal framework to combat financial crime. This culminated in the Law on Virtual Asset Service Providers (VASP), which took effect on July 1, 2023. The law mandates that all crypto firms register with the National Bank and adhere to strict AML/KYC rules, aligning Georgia with international FATF recommendations and increasing market transparency.
Compliance Requirements for Businesses in Georgia
Businesses in Georgia, especially those in high-risk sectors, must follow a detailed set of compliance rules designed to combat financial crime. These obligations are primarily outlined in the Law on Facilitating the Suppression of Money Laundering and Terrorism Financing, which aligns the country with international standards.
AML Checks
Organizations are required to implement several essential Anti-Money Laundering (AML) checks to detect and prevent illicit financial activity. Key measures include:
- Developing and maintaining a risk-based AML program tailored to the organization's specific risk profile.
- Conducting ongoing monitoring of all customer transactions to identify activity that is inconsistent with their known business and risk profile.
- Examining any complex, unusually large, or abnormal transactions that have no apparent economic or lawful purpose.
- Reporting all identified suspicious activities and transactions to the Financial Monitoring Service of Georgia (FMS).
- Prohibiting the creation or maintenance of anonymous accounts or accounts held in fictitious names.
Know Your Customer (KYC) Requirements
As part of the AML framework, robust Know Your Customer (KYC) procedures are mandatory, beginning at customer onboarding and continuing throughout the business relationship.
- Firms must identify every customer and verify their identity using reliable, independent documents and data before establishing a business relationship.
- For corporate clients, it is mandatory to identify the ultimate beneficial owner—defined as any individual who owns or controls 25% or more of the company—and take reasonable steps to verify their identity.
- Enhanced Due Diligence (EDD) must be applied to high-risk clients, such as politically exposed persons (PEPs) or customers associated with high-risk jurisdictions.
Other Mandatory Procedures
Beyond specific AML and KYC checks, the regulatory environment in Georgia mandates several other compliance functions:
- Implementing a formal internal compliance system, which includes appointing a dedicated compliance officer, screening employees, providing ongoing staff training, and conducting independent audits.
- Keeping detailed records of all identification data, transaction information, and compliance reports for at least five years after a business relationship ends.
- Adhering to all financial sanctions, such as asset freezes, mandated by United Nations Security Council Resolutions.
- Maintaining strict confidentiality and refraining from "tipping off" customers that their transactions are being reported or investigated.
Why this matters for Cross-Border Payments
For businesses managing cross-border payments between Georgia and countries with their own robust financial oversight, like India, these regulations introduce significant friction. The alignment with international AML/KYC standards means that what might have been a swift crypto transaction now requires meticulous documentation and enhanced due diligence on both sides. This can lead to operational bottlenecks, including transaction delays, higher compliance costs, and an increased risk of payments being flagged or blocked if they fail to meet the stringent verification requirements.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a global payments platform called the “Money Grid,” built on Bitcoin’s decentralized foundation. It provides two core products: Lightspark Connect for native Bitcoin payments and Grid Switch for fiat transfers using domestic real-time payment systems. Together, they enable instant, low-cost, and reliable cross-border payments, bypassing the delays and high costs of traditional systems. This infrastructure allows money to move 24/7, easing the operational bottlenecks that arise from stringent cross-jurisdictional financial oversight.
To help regulated institutions navigate complex rules, Lightspark provides tools that facilitate compliance. Features like audit-ready reporting, flexible custody options, and developer toolkits with built-in compliance integrations empower businesses to meet their own regulatory obligations. This allows Virtual Asset Service Providers (VASPs) to use Lightspark’s network to expand into new corridors while adhering to the strict AML/KYC requirements set by authorities like the National Bank of Georgia.
Learn more about how Lightspark’s global payments platform can modernize your cross-border transactions.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
- Chkhenkeli, Levan. "New Crypto Regulations in Georgia (Country)." ExpatHub.ge, expathub.ge/crypto-regulations-in-georgia/.
- "Georgia - Cryptocurrency Laws and Regulation." Freeman Law, freemanlaw.com/cryptocurrency/georgia/.
- "Georgia Crypto License - How to Get a Crypto License in Georgia." Gofaizen & Sherle, gofaizen-sherle.com/crypto-license/georgia.
- Georgia. Law on Virtual Asset Service Provider (VASP) Registration Procedure. Matsne, 1 July 2023, www.matsne.gov.ge/ka/document/view/5829496?publication=0.
- Georgia. Parliament. Law of Georgia on Facilitating the Suppression of Money Laundering and Terrorism Financing. Financial Monitoring Service of Georgia, 30 Oct. 2019, fms.gov.ge/Uploads/files/AML_CFT_Law.pdf.
- "INVESTOR ALERT – Cryptocurrencies and Digital Assets." Georgia Secretary of State, sos.ga.gov/page/investor-alert-cryptocurrencies-and-digital-assets.
- Team Sanction Scanner. "Anti-Money Laundering (AML) in Georgia." Sanction Scanner, 14 May 2024, www.sanctionscanner.com/aml-guide/anti-money-laundering-aml-in-georgia-78.
