Georgia, a country on the Black Sea, is preparing to regulate its cryptocurrency market. The head of the National Bank of Georgia, Koba Gvenetadze, told The Financial on Monday that the central bank has already drafted regulatory legislation in line with the requirements of international agencies.
Gvenetadze said that the size of the cryptocurrency market in Georgia is unknown due to the lack of regulation. However, according to Moneyval, the Council of Europe’s money laundering monitoring body, the monthly transaction volume as of September 2020 was between 3.5 and 5 million Georgian Lari, or between 1.09 and 1.64 million US dollars per month. Moneyval called on the Georgian authorities to “strengthen the practical application of their measures to combat money laundering and the financing of terrorism.”
The upcoming law complies with the requirements of the International Financial Action Task Force (FATF), the head of the central bank continued, and was written with the assistance of staff from the International Monetary Fund (IMF). Currently, financial institutions in Georgia are not allowed to provide virtual asset exchange and transfer services, and customers engaged in virtual asset transactions are considered to be at high risk and “subject to appropriate enhanced preventive measures.”
Gvenetadze did not name the date of submission of the normative act to the Parliament.
Georgia has long had a cryptocurrency mining sector. The country accounts for almost 1% of the total Bitcoin hash rate, an exceptional figure for a country with a population of less than 4 million people. It has a lot of hydroelectric power, although the lack of electricity in the remote region of Svaneti during the winter has been linked to illegal private cryptocurrency mining activities. Desperate to stop the harmful practice, the national church intervened and imposed a spiritual ban on it. Electricity is being supplied to private homes in the region for free in an attempt to keep the population.