Virtual Assets and Legal Tender
The legal boundaries of settlement in cryptocurrency in Georgia are established by the Organic Law of Georgia on the National Bank of Georgia. The first part of Article 39-1 of the law defines the status fundamentally: a virtual asset does not constitute legal tender. This proposition determines the entire subsequent regulatory logic — a virtual asset performs no monetary function on behalf of the state.
The second part of the same article regulates the prohibition: it is prohibited to carry out payments in virtual assets, except for those cases determined by a legal act of the National Bank of Georgia which are necessary for the provision of virtual asset services. In other words, the general rule is a prohibition, and only the exceptions defined by the National Bank — those necessary for the provision of services — are permitted.
What Can and Cannot Be Done: The Practical Meaning of the Prohibition
The practical meaning of the prohibition is that a "payment in cryptocurrency" written into a contract or obligation does not automatically create a legitimate form of settlement: a virtual asset is neither a unit of value nor a mandatory means of covering a price, a tax or another obligation. Where the parties consider settlement in a virtual asset, they must determine whether their transaction falls within the exception cases established by a legal act of the National Bank — only then is the payment lawful.
The format of a contract in the cryptocurrency context must therefore rest on two elements: first, the legal qualification — whether the planned operation is a payment in a virtual asset or part of a virtual asset service falling within the exception; second, the substantive terms governing the details of the exchange, storage and transfer of the asset. Mixing these two elements in a contract creates a risk of violating the law.
Virtual Asset Service Providers and Registration
Article 52-5 of the law regulates virtual asset service providers. A provider is obliged to register with the National Bank and to satisfy the requirements established by it; the rules of registration, deregistration and regulation are established by a normative act of the National Bank. It is impermissible to provide virtual asset services by a person that is not a provider registered with the National Bank or a representative of the financial sector empowered to do so by the legislation regulating its activity.
A provider is also prohibited from carrying out any activity other than the provision of virtual asset services, the ancillary activity necessary for that service and the exchange of its own virtual asset. This means that a registered provider is a specialized entity, and the expansion of its activity into other fields is prohibited by law — for the consumer this is an additional guarantee that the service is provided within a supervised, specialized circle.
Supervision by the National Bank and Sanctions
The National Bank supervises providers with broad powers: supervision covers registration and deregistration, inspection and regulation, the issuance of written instructions, and the imposition of additional requirements, restrictions and sanctions. The Bank may request and receive information on the sources of the provider's capital and on the owners of its significant share, establish fit-and-proper criteria for administrators, set the minimum supervisory capital and the standards for the storage of virtual assets and the management of risks — including operational and cybersecurity risks.
The emphasis of supervision lies on money-laundering and terrorism-financing risks: the Bank may suspend or limit a provider's operations of certain kinds — including by type of virtual asset — and its business relations with other providers, where they generate such risks, impede the traceability of transactions or the exercise of supervision. For a violation of the law and of the Bank's legal acts, a sanction, including a monetary fine directed to the state budget, may be imposed on the provider and its administrator. For the protection of consumers' rights the Bank is also empowered to issue relevant legal acts.
Practical Conclusions for Business
When planning settlement in cryptocurrency, three conclusions matter for business. First, a virtual asset is not legal tender and payments in it are prohibited, except for the cases determined by a legal act of the National Bank. Second, virtual asset services may be provided only by a provider registered with the National Bank. Third, the sanctions and restrictions the Bank may impose concern the provider's activity, and taking them into account is part of risk assessment.
Frequently Asked Questions
Can one pay with cryptocurrency in Georgia?
As a general rule — no: a virtual asset is not legal tender, and payments in it are prohibited, except for the cases determined by a legal act of the National Bank which are necessary for virtual asset services.
Is cryptocurrency legal tender?
No — the law directly establishes that a virtual asset does not constitute legal tender.
Who must be registered with the National Bank?
A virtual asset service provider — registration is a precondition of its activity. Providing such services by an unregistered person is impermissible.
What restrictions apply to a provider's activity?
A provider is prohibited from carrying out any activity other than virtual asset services, the necessary ancillary activity and the exchange of its own virtual asset.
What happens if the requirements are violated?
The National Bank may impose sanctions, including a monetary fine, and suspend or limit risky operations, including by type of virtual asset.
How We Help on Legal.ge
On Legal.ge you will find financial-law lawyers who will help you navigate the regulation of virtual assets: qualifying the transaction, preparing the contractual terms and assessing compliance with the National Bank's requirements. Choose a specialist by experience and contact them directly on the platform.