Georgia, a small country with a population of under 4 million stands out to be one of the countries in the world to have embraced cryptocurrencies.
Georgia, a Black Sea nation, is planning to regulate its cryptocurrency market. On Monday, Governor of the National Bank of Georgia, Koba Gvenetadze, told The Financial that the central bank has already drafted draft regulatory legislation in compliance with foreign organizations’ standards.
Why Georgia is planning to regulate its crypto market
Georgia is planning to regulate its crypto market and here’s the reason behind this decision. The emergence of a cryptocurrency has had a significant influence on the financial world due to the history of currency development and the demand for extra monetary methods.
Products and services are more widely available thanks to encrypted money. Crypto money has been accepted as payment by the world’s major corporations. The number of people using blockchain is growing. Simultaneously, regulatory legislative actions on virtual money are being drafted in a number of states.
This lowly populated country is progressively becoming involved in these processes. According to E-money1, the number of Bitcoin users climbed by 400% from 2016 to 2017 and by 130% from 2016 to 2017. The need for research is emphasized by the rapid growth rates of cryptocurrency users and the inadequacy of investigating the problem.
The first Georgian cryptocurrency (Golden Fleece) was launched in June 2017, with the goal of creating a cryptocurrency output database on Georgia’s Black Sea coast. Bitfury is a major blockchain company that provides a number of services as well as produces bitcoin and holds a free economic zone in the country.
In Gori and Tbilisi, the corporation has two blocks. Given Georgia’s status as one of the first states to adopt blockchain technology, the implementation of the technology can be viewed as a challenge, as any innovative technology necessitates the assessment of associated risk factors as well as the definition and establishment of relevant concepts at the legislative level.
It’s worth noting that the number of legal organizations using blockchain technology is constrained by the definition of the technology.
In Georgia, virtual money is gaining popularity. It is not, however, a legal mode of payment in this country, as it is in many other states. Despite the National Bank’s position, the Cryptomotive ATM operator Krimmottom began operating in public areas in October 2018.
Due to a lack of regulation, the scale of the Georgian crypto market is unclear, according to Gvenetadze. Moneyval, the Council of Europe’s money-laundering monitoring organization, estimated the monthly transaction volume as of September 2020 to be between 3.5 million and 5 million Georgian lari, or $1.09 million to $1.64 million USD.
At the time, Moneyval advised Georgian authorities to “strengthen the actual execution of its anti-money laundering and anti-terrorist financing policies.”
The upcoming law meets with international Financial Action Task Force (FATF) regulations, according to the central banker, and was drafted with the help of IMF experts.
Financial institutions in Georgia are now prohibited from providing virtual asset exchange and transfer services, and clients who participate in virtual asset-related activities are deemed high-risk and subject to “necessary increased preventative actions.”
Georgia is one of the leading countries in Bitcoin mining
Georgia is reportedly one of the leading countries in Bitcoin mining. The country boasts about 1% of the total Bitcoin hash rate, which is remarkable for a country with a population of fewer than 4 million people.
It has plenty of hydropower, yet power outages in the isolated Svaneti area were blamed on illicit private crypto mining throughout the winter. The national church stepped in to deliver a spiritual injunction against the damaging behaviour, desperate to stop it. As part of an effort to keep the populace in the area, free electricity is offered to individual households.
