Georgia has been in a tough position since the start of the war in the east. Ukraine and Russia are the country's largest trading partners. In an interview with Finchannel about this situation, Koba Gvenetadze, governor of the National Bank of Georgia (NBG), says that it plans to set up a regulatory framework for crypto.
Crypto Trading in Georgia
It is not yet clear how many people will be affected by these upcoming measures. Gvenetadze says the country does not yet have accurate figures on crypto behaviour in Georgia.
“However, the fifth Georgia mutual evaluation report, published in September 2020 […] states that the volume of exchange transactions can be between 3.5 and 5 million Georgian lari (1 to 1.5 million euros) per month.” This is the most accurate the governor can be.
It remains to be seen what these regulations will look like after the involvement of the FATF and the IMF.
Crypto traders branded high risk
Gvenetadze says that measures have already been taken by the NBG. It seems like it sees crypto as a major threat. The bank has banned financial institutions in Georgia from providing crypto services.
The National Bank also took measures against people who trade in digital assets (i.e. crypto). They must be marked as 'high risk' by financial institutions and given 'appropriately enhanced prevention measures'. So this is not very positive for investors in Georgia.
Anti-money laundering organization helps
When asked if the country wants to regulate the crypto market, Gvenetadze simply says yes. This is somewhat positive for crypto, as it automatically makes it legal. However, with regulation comes rules.
To determine these, he enlists the help of intergovernmental organizations. They should help Georgia with the crypto law changes. First, they prepared a draft in accordance with the Financial Action Task Force (FATF). This is an organization that develops policies to combat money laundering.
Gvenetadze said: “It should be noted that before the above regulations come into effect, some measures have already been taken by the NBG. In particular, financial institutions are prohibited from offering virtual services for the exchange and transfer of assets. Also, persons carrying out activities related to virtual assets should be classified by financial institutions as high-risk clients and should be subject to appropriate and enhanced preventive measures.”
IMF also involved in regulation
Not only the FATF, but also the International Monetary Fund (IMF) will help Georgia setting up regulation. The organization previously advised Argentina, El Salvador and India, among others, not to get started with crypto, so given the history of the organization, this could turn out negatively for crypto investors.
At the moment, the IMF is helping to design the legislative changes. This includes registration and licensing, compliance testing to see if this will work, and anti-money laundering control regulations for players in the crypto market.
Time is needed to clarify these regulations, which are yet to come into effect. This does however not stop the Georgian bank from keeping the reins of the crypto market extra tight.
The Caucasian nation is currently one of the few countries that wants to regulate the crypto sector without chasing companies away with regulations. In 2019, the former Soviet state passed a law eliminating VAT on crypto-related services.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments