The Whitepaper and Its Legal Nature
A crypto project's whitepaper — the technical and economic description of the project — falls under two different legal regimes in Georgia, and this distinction must be clear from the start. Where the token bears the features of a security, the disclosure documentation is subject to the issuance prospectus requirements of the Law on Securities Market; whereas the whitepaper of a utility token has no statutory form at all — this must be said directly, because the market's common perception says the opposite.
Development of the document therefore begins with qualification: what the token is and which requirements follow the issue. If the token is a security, the content requirements of the prospectus are established by law and must be observed; if not, the quality of the document is solely a matter of the parties' diligence and market expectations. The market, however, forms de facto standards: documents that do not disclose the team, the model and the risks do not attract serious participation, whatever the law requires.
Content Requirements of the Prospectus
Where the token is a security, a public offer may be carried out only upon publication of a prospectus prepared and approved in compliance with the law and the rules of the National Bank. The preliminary prospectus contains information about the issuer — name, address, date of foundation, quantity and class of placed securities, controlling holders and members of the governing body; a description of the last 2 years of activity together with its principal risks; auditor-verified financial statements for the last 2 fiscal years; and the details of the securities to be issued — class, approximate quantity, subscription procedure, method of calculating interest, maturity and redemption conditions, and the expected use of proceeds (Article 4).
Within 15 days of the submission of the application the National Bank reviews the prospectus, requests clarification, approves or refuses; where no information is conveyed, the prospectus is deemed approved. The current financial information in the final prospectus must not be older than 18 months, and approval concerns form, not the accuracy of the content — a disclaimer that appears on the front page. The document on the terms of the offer is subject to submission no later than 10 days after the approval of the prospectus.
Post-Offer Reporting
Documentation does not end with the offer. Within 1 month of the completion of a public offer of securities, the issuer submits to the National Bank a report on the issuance and placement containing information on the exact quantity and price of the securities offered and sold; the bank reviews the report within 14 calendar days and may request clarification or changes (Article 8).
An issuer of public securities is obliged to prepare, submit to the National Bank and publish an annual report, and an issuer of public debt or public equity securities also a semi-annual report. The annual report contains the auditor-confirmed financial statements, a management report and a declaration of the responsible persons that the reports are complete, correct and fair (Article 11).
Structuring the Whitepaper to the Requirements
The practical recommendation is simple: build the whitepaper so that, in the event of a security qualification, its conversion into a prospectus happens at minimal cost. To this end the sections follow the prospectus logic: project and team (about the issuer), technology and model (activity and risks), financial position, token parameters (securities to be issued), use of proceeds and governance.
For a utility token the same structure serves a different function: no statutory form exists, but the document becomes a contractual basis — its terms define the relationship with the token purchasers. Precision here is therefore a matter not of courtesy but of liability: a condition shown to the market derives from the document.
Frequently Asked Questions
Does the whitepaper have a statutory form?
Only where the token is a security — then the prospectus requirements operate (Article 4). A utility token's document has no statutory form, though it remains a contractual basis.
What must the prospectus contain?
Identification of the issuer and governance, 2 years of activity with risks, audited statements and the terms of the securities — quantity, interest, maturity, use of proceeds (Article 4).
What happens after the offer?
Within 1 month an issuance and placement report is submitted, which the bank reviews in 14 calendar days (Article 8); a public issuer also produces annual and sometimes semi-annual reports (Article 11).
How fresh must the information be?
Current financial information in the final prospectus must not be older than 18 months, and the descriptions must correspond to the most recent date (Article 4).
How We Help on Legal.ge
The Legal.ge team assists crypto projects in preparing their documentation: assessing token qualification, fitting the structure of the document to prospectus requirements, drafting risk disclosures and planning the post-offer reporting routine. We view the document with both eyes — the market's and the regulator's — and prepare a version that suits both. Contact us to discuss your project.
Engage us before publication: an edit before release costs incomparably less than one after.