We would like to inform you that the Rules for Registration, Deregistration, and Regulation of Virtual Asset Service Providers (VASPs) have been approved.

MG LAW actively participated in consultations held by the National Bank of Georgia with specialists and stakeholders in this field. As a result, on June 13, 2023, the President of the National Bank of Georgia approved Order No. 94/04 (available here), which fulfills and clarifies the existing legislative amendments in relation to VASPs (please see our earlier publication).

This order sets out the information required for VASP registration with the National Bank, anti money laundering and counter-terrorist financing procedures, as well as other requirements, for example, the head office specifications and logging requirements. Additionally, the order establishes regulations governing VASP activities. For instance, it prohibits lending virtual assets to individuals and offering virtual asset services through agents, among other restrictions.

The order and associated regulations will come into effect on July 1, 2023. However, existing VASPs have specific timelines to comply with the regulations. Some of these timelines are as follows:

• VASPs who exchange virtual assets in national or foreign currency through self-service kiosks must ensure proper video surveillance of these kiosks by January 1, 2024.
• VASPs have a period of 1 year after registration, but no later than July 1, 2024, to implement a control system against money laundering and terrorist financing.
• Persons who, prior to July 1, 2023, provided virtual asset services for the benefit of another person, have 3 months to implement a software (electronic) system that utilizes distributed ledger technology (DLT) to automatically detect suspicious or unusual transactions by processing existing information.

MG Law will provide a detailed overview of the rules for registration, deregistration, and regulation of VASPs in the following publications.