The government has approved amendments to the legal framework for the Caucasian nation’s financial sector
Georgia is set to launch a framework for crypto regulations aiming to align the country law with relevant EU provisions. The move can rightfully make Georgia one of the most crypto-friendly countries as it is pursuing its ambitions of becoming a global crypto hub.
In order to synchronize the country’s crypto regulations with associated rules in the European Union, Georgian lawmakers have prepared a new legal framework to regulate digital business and cryptocurrency trading in the region. According to Georgian Minister of Economy and Vice Prime Minister Levan Davitashvili, the initial version of the legislation is targeted at achieving convergence with three important directives of the European Union — Capital Requirements Directive (CRD), Virtual Asset Service Providers Directive (VASP), and Tax Services Directive (PSD2).
The new regulatory framework aims to form clear guidelines on providing legal statuses to entities involved in virtual asset trading and distinguishing their obligations and rights. Moreover, the new framework will provide requirements for the prevention of the use of cryptocurrencies for money laundering and terrorist financing.
The reformation of the VASPs directive is particularly important. It is seen as one of the most important steps towards the sustainable regulation of the Georgian cryptoсurrency industry. A draft bill has already been sent to the parliament and the amendments are expected to be passed in the autumn session. Apparently, we can expect that in the fall, Georgia will have updated legislation that will significantly develop the financial sector.
According to the report, the minister emphasized that it’s important to synchronize the Georgian financial legislation with associated directives in the EU. This couldn’t be more true, and here is why.
Major crypto exchanges are already interested in joining the Georgian crypto market. One of the world’s leading digital asset exchange, Binance, is planning to open its regional headquarters in Georgia. Based on the report, the Prime Minister, Irakli Gharibashvili, has also met with other key participants in the crypto market, including representatives of the blockchain company Ripple and another large cryptocurrency exchange, FTX to discuss their plans to join the Georgian crypto market. Both companies have expressed their interest in setting up offices in Georgia. It seems that mentioned crypto giants are just waiting for a regulatory framework and licensing of crypto-related companies. The Georgian lawmakers are confident that the new legal framework will make it easier for major players in the global crypto industry to establish presence in Georgia.
The latest framework is only the first step by Georgia on its way to becoming a European crypto-hub, in accordance with the government’s official 2022–2025 development strategy. The overall vision was approved by the executive power as many as two years ago. Lawmakers in Georgia have been working on cryptocurrency legislation during year, intensifying their efforts after the central bank governor Koba Gvenetadze noted the lack of crypto regulation in the country back in April. The plan to make a global crypto-hub in the region seems totally realistic taken that Georgia has indeed emerged as one of the most crypto-friendly countries in the world. According to the Forex Suggest study, which sought to identify the most crypto-friendly jurisdiction, the country was ranked the fourth most crypto-friendly jurisdiction after Hong Kong, the United States and Switzerland as of July 2022. Among frequent crypto users, Georgia is especially known for its high density of crypto ATMs allowing them to easily buy and sell crypto in exchange for cash. According to the data from Coin ATM Radar, Georgia hosts 45 crypto ATMs at the time of writing.
It is interesting that thousands of people have fled to Georgia due to the uncertainty about the economy of their countries which means that they see the country as the safe haven in terms of financial stability.