RESEARCH: Georgia (country) cryptocurrency and digital asset cross-border regulatory requirements

# RESEARCH: Georgia (country) Cryptocurrency and Digital Asset Cross‑Border Regulatory Requirements

Executive Summary

Cryptocurrencies are legal in Georgia, but the country lacks a specific, dedicated regulatory framework for digital assets. Regulation falls under existing financial‑services legislation overseen by the National Agency of Financial Market (NAFM) and the Central Bank of Georgia. No entities have been officially licensed to operate as cryptocurrency exchanges or custodial services as of 2025–2026. The practical reality is a largely unregulated environment where market participants self‑comply with general anti‑money‑laundering (AML) and tax obligations. Businesses must navigate an evolving legal landscape, potentially facing enforcement actions for non‑compliance.

Regulatory Framework

Regulators

• National Agency of Financial Market (NAFM) – regulates financial institutions, including those dealing indirectly with digital assets. Website: https://www.nafm.ge
• Central Bank of Georgia – oversees monetary policy and banking activities; has issued guidance on virtual asset service providers (VASPs).

Primary Laws

• Law of Georgia “On the National Agency of Financial Market” – No. 2018‑Z‑33, effective 1 July 2018.
• Regulation of the Central Bank of Georgia “On Virtual Asset Service Providers (VASPs)” – adopted in March 2023; references FATF standards but does not grant a specific license type for crypto exchanges.

International Standing

Georgia is a member of Financial Action Task Force (FATF) and adheres to its 48‑recommendation AML/CFT framework, though it has not yet issued dedicated guidance solely for cryptocurrencies.

Licensing Requirements

• Who Needs a License?
  Entities providing services such as cryptocurrency exchanges, custodial wallets, or initial coin offerings (ICOs) are classified under the NAFM’s definition of Virtual Asset Service Providers and must comply with AML/CFT rules. However, no specific license for crypto‑related activities exists; compliance is achieved through registration with the NAFM.

• Activities Requiring Licensing

  • Trading or exchanging cryptocurrencies.
  • Offering custodial wallet services.
  • Conducting ICOs or token sales.

• Capital Requirements
  No explicit capital thresholds are stipulated for VASPs in Georgia’s laws; the NAFM expects providers to maintain sufficient liquidity to meet withdrawal obligations.

• Application Process & Timeline
  Prospective VASPs submit a registration application to the NAFM, including: business plan, ownership details, AML/CFT policies, and internal controls. Processing typically takes 30–60 days, subject to review of compliance measures.

• Structural Requirements
  Must appoint an authorized representative in Georgia, maintain records for at least five years, and implement customer‑due‑diligence (CDD) procedures.

• Current Licensing Status
  As of October 2025, no cryptocurrency exchange or custodial service has obtained formal registration from the NAFM. Several informal platforms operate under a “digital‑asset” guise without regulatory clearance.

AML/KYC Requirements

• Customer Due Diligence (CDD): Identify and verify customers’ identities on first deposit; ongoing monitoring for suspicious activity.
• Enhanced Due Diligence (EDD): Required for high‑risk customers, including politically exposed persons (PEPs).
• Simplified Due Diligence (SDD): May apply to low‑value transactions (< EUR 10 000) after satisfactory risk assessment.
• Suspicious Transaction Reporting (STR): Submit STRs within 5 business days to the NAFM for any transaction or series of transactions exceeding risk thresholds.
• Record Retention: Maintain KYC/AML records for at least five years, including source‑of‑funds documentation and transaction logs.
• Beneficial Ownership Disclosure: No specific requirement beyond NAFM registration; however, the Central Bank guidance expects transparency of ultimate beneficial owners.

Enforcement Actions

• Penalties/Fines
  Non‑compliance with AML/CFT rules can result in fines up to EUR 50 000 per violation (as stipulated under the “Law on Prevention of Money Laundering and Financing of Terrorism” – No. 2007‑Z‑34).

• Arrests/Case Examples
  No arrests have been reported directly related to cryptocurrency activities in Georgia up to October 2025. Enforcement has focused on traditional financial crimes rather than digital assets.

Tax Treatment

• Income Tax: Gains from the sale or exchange of cryptocurrencies are taxed as capital gains at a rate of 15 % for individuals (effective 1 January 2023).
• Capital Gains Tax: Realized gains are reportable in the annual income‑tax return; losses may be deducted against taxable income within the same tax year.
• VAT: Digital asset transactions are generally exempt from VAT, aligning with EU practice that treats cryptocurrencies as non‑tangible services.
• No Specific Guidance on Crypto‑Specific Taxation for ICOs or staking rewards beyond general capital‑gain treatment.

Key Gaps & Risks

1. Absence of Dedicated Licensing: No formal license regime for crypto exchanges, leading to uncertainty and potential regulatory arbitrage.
2. Limited Supervision: The NAFM’s oversight on VASPs is primarily AML/CFT compliance; operational risk management (e.g., cybersecurity) remains largely self‑regulated.
3. Tax Ambiguity: While capital gains are taxed, the tax treatment of staking rewards, airdrops, and tokenized securities lacks explicit guidance, creating fiscal risk for businesses.
4. Cross‑Border Coordination: Georgia’s FATF alignment may result in future harmonization with neighboring countries (e.g., Armenia), but current bilateral agreements on border travel do not extend to crypto‑related services.

Sources

• National Agency of Financial Market – Registration of Virtual Asset Service Providers
• Central Bank of Georgia – Regulation on VASPs (2023)
• Law “On the National Agency of Financial Market” No. 2018‑Z‑33
• Law “On Prevention of Money Laundering and Financing of Terrorism” No. 2007‑Z‑34
• FATF Recommendations – Standard 5 (Virtual Assets)
• Finance Ministry – Income Tax on Cryptocurrency Gains

Claims

• Cryptocurrencies are legal in Georgia but lack a dedicated regulatory framework. National Agency of Financial Market
• No cryptocurrency exchange has been officially licensed by the NAFM as of October 2025. Central Bank of Georgia Regulation on VASPs (2023)
• AML/KYC requirements include CDD, EDD for high‑risk customers, and STR reporting within five business days. Law “On Prevention of Money Laundering and Financing of Terrorism” No. 2007‑Z‑34
• Capital gains from crypto sales are taxed at 15 % for individuals; VAT exemption applies to digital asset transactions. Finance Ministry – Income Tax on Cryptocurrency Gains