The National Bank of Georgia is taking steps to regulate the crypto 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 Georgia Monetary Authority plans 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.
The National Bank of Georgia (NBG) has prepared the necessary amendments in accordance with the requirements of the Intergovernmental Financial Action Task Force on Money Laundering (FATF), emphasized the senior official.
The bank is also receiving technical assistance from the International Monetary Fund (IMF) in developing 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 crypto market players.
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 have been banned from providing digital currency exchange and transfer services, Gvenetadze said.
“Furthermore, individuals who conduct 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 the current cryptocurrency turnover in the country, the central bank chief noted that since the cryptocurrency sector is still unregulated, the 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 against Money Laundering and the Financing of Terrorism (moneyval) launched in September 2020, the monthly volume of crypto exchange transactions in Georgia was between 3.5 and 5 million Georgian Lari (1 to 1.5 million euros).
The regulatory push now comes after in October last year the NBG Announced will launch a digital version of the national fiat currency starting in 2022. The monetary policy regulator said it plans to employ the central bank’s blockchain-based digital currency (CBDC) to facilitate retail sales.
Do you expect Georgia to regulate its crypto space in the near future? Let us know in the comments section.
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