In a recent interview with its governor, the National Bank of Georgia revealed that it is working to regulate cryptocurrency markets in South Caucasus countries. Companies in this industry can expect to be licensed, but financial institutions are already prohibited from offering crypto-related services.
Central Bank of Georgia to Propose Cryptocurrency Rules
Georgia’s monetary authority is planning to introduce rules for operations in the nation’s crypto space. The financial regulator has drafted new legislation to achieve this, the bank’s Governor Koba Gvenetadze told The Financial, a Georgian business news portal.
According to the most senior official, the National Bank of Georgia (NBG), has completed the required amendments as per the demands of the intergovernmental Financial Action Task Force on Money Laundering.
Gvenetadze said that the bank also receives technical support from the International Monetary Fund, (IMF), in developing the regulatory framework. The publication quotes him as saying:
At this stage, the draft legislation changes include compliance testing, registration and licensing as well as AML controls for cryptocurrency market participants.
The rules are being finalized but Georgian authorities have taken measures to limit exposure of financial firms to crypto assets. Gvenetadze noted that they were prohibited from offering digital currency transfer and exchange services.
“Also, persons that carry out activities related to virtual assets should be classified by financial institutions as high-risk clients and should be subject to appropriate enhanced preventive measures,” the governor said.
When asked to estimate the amount of cryptocurrency currently being traded in Georgia, the head the central bank stated that the sector was not yet regulated and Georgian authorities don’t have any accurate information.
According to a report published by Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval) released in September 2020, the monthly crypto exchange transaction volume in Georgia was between 3.5 and 5 million Georgian lari (€1 to €1.5 million).
The regulatory push now comes after in October last year, the NBG announced it’s going to launch a digital version of the national fiat currency as early as 2022. According to the monetary regulator, it intends to use the CBDC (blockchain-based central bank digital currency) for retail sales.
What do you think Georgia’s crypto-space regulation will look like in the future? Please leave your comments below.
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