Georgia, the Black Sea country, is preparing to regulate its cryptocurrency market. Governor of the National Bank of Georgia, Koba Gvenetadze, told The Financial on Monday that the central bank has already drawn up draft regulatory legislation in accordance with the requirements of international bodies.
Gvenetadze said that the size of the Georgian cryptocurrency market is unknown, due to a lack of regulation. However, an estimate by Moneyval, the Council of Europe’s money laundering watchdog, put its monthly transaction volume at between 3.5 million and 5 million Georgian lari, or between US$1.09 million and US$1.64 million, as of September 2020. Moneyval urged the Georgian authorities to “strengthen the practical implementation of its anti-money laundering and anti-terrorist financing measures” at the time.
The upcoming legislation meets the requirements of the Financial Action Task Force (FATF), the central banker continued, and was drafted with the help of International Monetary Fund (IMF) staff. Currently, financial institutions in Georgia are not authorized to provide virtual asset transfer and exchange services, and customers engaging in virtual asset activities are considered high-risk and “subject to appropriate enhanced preventive measures.”
Gvenetadze did not specify a date for the introduction of the regulatory legislation in Parliament.
Georgia has long had a cryptocurrency mining industry. The country accounts for almost 1% of the total Bitcoin hash rate, something exceptional for a country with less than 4 million inhabitants. It has abundant hydroelectric power, although power shortages in the remote Svaneti region during the winter have been blamed on illegal private cryptocurrency mining activities. Desperate to stop this harmful practice, the national church stepped in to issue a spiritual mandate against it. Electricity is supplied to private residences in the region free of charge as part of an attempt to retain the population.
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