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Central Bank of Georgia Commences Working Towards Implementing Cryptocurrency Regulation

Central Bank of Georgia Commences Working Towards Implementing Cryptocurrency Regulation

Summary:

  • The eastern European nation will follow international standards as it sets out to launch an anti-money laundering and licensing regime. The National Bank of Georgia, the country’s central bank, is planning to regulate the country’s crypto market. 
  • The country’s crypto market is aimed at GEL 5 million (the US $1.6 million), as said by Koba Gvenetadze, the Governor of Georgia. 
  • The draft law will cover rules for virtual asset service providers and specific compliance procedures to discourage money laundering. 
  • The rules will also serve as a guiding light for anti-money standard setters, The Financial Action Task Force, who will also receive advice from the International Monetary Fund.

In his statement, the Governor of Georgia, Koba Gvenetadze, informed that the country is working towards regulating the crypto market in the country on April 4. And now, the National Bank has formulated the initial draft for required legislative procedures in accordance with the inter-governmental Financial Action Task Force (FATF). The rules have been drafted in an effort to prevent incidences of money laundering. The FATF is also accepting technical support from the International Monetary Fund staff, and together they are drafting this regulatory framework. 

In his statement, the Governor also informed about the following measures taken in this direction. Significant points of this legislature include:

  • The current draft also covers specific changes in the registration, licensing, and compliance testing of virtual asset service providers. It also summarizes all the anti-money laundering control requirements for such crypto players.
  • The Governor also mentioned that the National Bank of Georgia is taking the necessary action on the same. 
  • Financial institutions should be banned from offering any virtual asset exchange or transfer services. 
  • Citizens carrying out virtual asset transactions would be denoted by financial institutions as high-risk clients and, therefore, be subjected to stringent preventative measures. 

As of now, the annual turnover of the cryptocurrency industry in the country is being set at US$1.5 million (as reported by the 5th Round Mutual Evaluation Report of Georgia published in September 2020). However, this data is open to speculation due to the non-regulation of the Virtual Assets Services Provider (VASP) sector until now.  In October 2021, the Vice-President of Georgia, Papuna Lezhava, announced that the central bank was preparing to launch the pilot CDDC by 2022. He also contemplated that they plan to use a blockchain-based version of the national Fiat and the Georgian Lari to boost retail sales.

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