The National Bank of Georgia is taking steps to regulate the cryptocurrency market in the South Caucasus country, its governor revealed in a recent interview. While companies in the industry expect a licensing regime, financial institutions have already been banned from providing cryptocurrency-related services.
Central Bank of Georgia to Propose Cryptocurrency Regulations
The Georgian monetary authority plans to introduce rules for operations in the country’s crypto space. The financial regulator has drafted new legislation to achieve this, bank chairman Koba Gvenetadze told The Financial, a Georgia-based business news portal.
The National Bank of Georgia (NBG) prepared the necessary changes in accordance with the requirements of the Intergovernmental Financial Action Task Force on Money Laundering (FATF), the senior official emphasized.
The bank is also receiving technical assistance from the International Monetary Fund (IMF) to develop the regulatory framework, Gvenetadze added. Quoted by the publication, he elaborated:
Preliminary legislative changes at this stage include registration and licensing, compliance testing, and AML monitoring requirements for cryptocurrency market participants.
While the rules for these entities are still being finalized, the Georgian authorities have already introduced measures that limit the exposure of traditional financial firms to decentralized crypto assets. They were prohibited from providing digital currency exchange and transfer services, Gvenetadze noted.
“Furthermore, individuals who engage in activities related to virtual assets should be classified by financial institutions as high-risk customers and should be subject to appropriate enhanced preventive measures,” the governor said.
Asked to provide an estimate of current cryptocurrency earnings in the country, the central bank chief noted that since the cryptocurrency industry is still unregulated, Georgian authorities do not have recent and accurate data on its size.
According to a report published by the European Committee of Experts on the Evaluation of Measures to Combat Money Laundering and Terrorist Financing (Moneyval) published in September 2020, the monthly volume of cryptocurrency transactions in Georgia was between 3, 5 and 5 million Georgian lari (€1 to €1.5 million).
The regulatory push now comes after NBG announced in October last year that it will launch a digital version of the national fiat currency starting in 2022. The monetary policy regulator said it plans to employ a blockchain-based central bank digital currency ( CBDC). ) to facilitate retail sales.