Georgia aims to adopt European anti-money laundering crypto standards

Georgia, one of the world’s most cryptocurrency-friendly countries, is moving to introduce new crypto regulations to pursue its ambitions to become a global crypto hub.

Georgian lawmakers have drafted a new regulatory framework aimed at digital business and cryptocurrency trading in the country, Georgian Economy Minister and Deputy Prime Minister Levan Davitashvili announced.

Davitashvili said a draft bill has been submitted to parliament and the amendments are expected to be adopted in the autumn session, local news agency Business Media Georgia reported on Monday.

According to the minister, the draft bill aims to coordinate local cryptocurrency laws with three major EU directives, including the Payment Services Directive (PSD2), the Capital Requirements Directive (CRD) as well as the Virtual Asset Service Provider (VASP) Act.

The VASP Act aims to give legal status to entities involved in the trading of digital assets. The new framework will also prevent the use of cryptocurrencies for money laundering or terrorist financing, the report notes.

According to Davitashvili, the adoption of VASP rules is essential for Georgia to ensure sustainable regulation of the cryptocurrency industry. The minister is said to have emphasized that it is important to synchronize the Georgian financial legislation with related rules in the EU. The latest framework is just the first step as Georgia aims to become a crypto hub in the future, in line with the government’s official development strategy for 2022-2025.

Georgia has emerged as one of the most crypto-friendly countries in the world. In a study by Forex Suggest, Georgia was ranked the fourth most crypto-friendly jurisdiction after Hong Kong, the United States and Switzerland in July 2022. Georgia is specifically associated with a high density of crypto ATMs, making it easy for users to buy and sell crypto in exchange for cash. According to data from CoinATMRadar, Georgia hosts 45 crypto ATMs at the time of writing.

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Lawmakers in Georgia have been working on cryptocurrency legislation this year, and central bank governor Koba Gvenetadze noted the lack of crypto regulation in the country in April. The first reports of Georgia’s upcoming new crypto rules came as tens of thousands of Russians fled to Georgia due to Western sanctions against Russia and economic uncertainty. Crypto apparently became an important tool for many Russians arriving in Georgia to manage their finances amid credit and debit card sanctions.