Cybersecurity Standards and Compliance for Crypto Business
Crypto businesses—exchanges, wallet providers, custodians—are prime targets for cybercriminals. Due to the irreversible nature of digital assets, a security breach is often fatal for a business. In Georgia, as the crypto sector becomes regulated, the National Bank imposes strict information security requirements on Virtual Asset Service Providers (VASPs). Cybersecurity compliance is not just an IT issue; it is a legal obligation to protect customer funds and personal data. Non-compliance leads to license revocation, heavy fines, and legal liability towards victims.
Our service covers the full setup and audit of the cybersecurity legal framework, essential for VASP authorization and operation:
- Information Security Policy Development: Drafting internal documentation compliant with ISO 27001 standards and National Bank requirements.
- Data Protection (GDPR/Local Law): Legal regulation of processing, storing, and transferring client data during crypto transactions.
- Incident Response Plan: Outlining mandatory legal procedures in case of a cyberattack or data leak (timelines for notifying the regulator and users).
- Third-Party Risk Management: Auditing contracts with IT vendors, cloud services, and auditors to ensure liability allocation.
- Employee Non-Disclosure Agreements (NDAs): Creating strict legal leverage to prevent insider threats.
- VASP Registration Support (IT Section): Legal refinement of technical and security documentation to be submitted to the National Bank.
In practice, ignoring the legal aspects of cybersecurity leads to disastrous consequences. A common scenario involves a "phishing" attack on an employee, resulting in hackers gaining access to client wallets. If the company did not have appropriate security protocols and a verified employee training system in place, it cannot defend itself in court and will bear full financial liability. Another problem is personal data leakage (KYC documents), leading to fines by the State Inspector. Disputes are also frequent when a software provider (vendor) makes an error, but the contract does not account for their liability for damages.
In Georgia, this field is regulated by the Law on Information Security (applicable to critical infrastructure subjects) and the Law on Personal Data Protection. Specifically for crypto businesses (VASPs), the Order of the President of the National Bank of Georgia on Approving the Rule for Registration, Deregistration, and Regulation of Virtual Asset Service Providers applies, directly requiring information systems audits and security policies. Civil Code norms regarding compensation for damages are also relevant.
The lawyer's role in this process is to translate technical requirements into legal language and turn them into enforceable documents. Work begins with a risk assessment (Gap Analysis). Then, a security policy is drafted and approved by the director. The lawyer also participates in the technical audit process to ensure the auditor's conclusion is useful for legal purposes. In the event of an incident, the lawyer manages crisis communication with law enforcement and the regulator.
Legal.ge allows you to connect with lawyers specializing in cyber law and crypto regulations. Technical protection alone is not enough; you need a legal shield to protect you from regulatory sanctions and client lawsuits. Ensure the resilience and credibility of your crypto business with the help of qualified specialists on Legal.ge.
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