Georgia Drafts New Legislation to Meet EU Digital Asset Regulations Standards
The Georgian government has approved an updated legal framework for the financial industry, including more stringent rules for digital assets. The draught laws, initiated by the Ministry of Economy and Sustainable Development, have already been sent to the Georgian Parliament for ratification in its autumn session.
Minister of Economy Levan Davitashvili told local news outlet Business Media that the legislative package would implement three major European Union directives to Georgia to boost its financial sector. The EU Tax Services Directive (PSD2), Capital Requirements Directive (CRD), and Directive on Virtual Asset Service Providers (VASP).
He emphasised the VASP order, stating that it will offer legal standing to digital asset trading firms as well as specify their rights and obligations.
The order will also include written conditions for the entities to follow to avoid money laundering and terror financing.
“[VASP-directive] is particularly important for the formation of a legal environment for crypto-services and crypto-exchange organisations in Georgia,” he said.
Davitashvili said that the updated law is one of the most important measures for the long-term regulation of Georgia's digital asset industry. The other directives will also help the fintech industry.
The new legislative framework is not the only move the four-million Caucasus region country is taking to realise its ambition of becoming a digital assets hub, as outlined in a five-year growth strategy from 2020 to 2025.
The National Bank of Georgia said in April that it was nearing the implementation of new Financial Action Task Force (FATF) compatible digital asset laws, which it had been working on in collaboration with the International Monetary Fund (IMF).
Several digital asset firms have expressed interest in the impending regulatory clarity. Several of them are planning to establish regional offices in the country, including Binance, FTX, and Ripple. According to reports, Georgian Prime Minister Irakli Gharibashvili met with FTX's Sam Bankman-Fried to discuss the exchange's goals.
Georgia, on the other hand, has not extended the same invitation to digital asset block reward mining. Georgia has prohibited locals from engaging in the energy-intensive industry, requiring residents of the country's northeastern province of Svaneti to sign a holy oath not to engage in block reward mining.