Virtual Asset Service Providers to Be Subject to Full Supervision by the NBG to Ensure Safer Functioning of the Virtual Asset Market and Enhanced Consumer Protection

To ensure the safer functioning of the virtual asset market in Georgia, enhance consumer protection, and increase public trust, Virtual Asset Service Providers (VASPs) will be subject to full prudential supervision by the National Bank of Georgia (NBG), similar to other financial institutions under the NBG's supervision.

Specifically, through amendments to the Organic Law on the National Bank of Georgia, the NBG has been granted the authority to request and receive any type of information from a Virtual Asset Service Provider, both through on-site and off-site inspections. The NBG is also authorized to determine the minimum supervisory capital amount and its calculation rule, set requirements for capital and assets, establish risk management standards and frameworks, and impose other additional requirements.

The implementation of these amendments will contribute to even greater protection for consumers and investors. Additionally, businesses will become more resilient from both technical and operational perspectives, and the country will move closer to best international practices.

The period from 2023 to the present has demonstrated that, in Georgia as well as globally, the virtual asset service sector is rapidly changing and evolving. Virtual asset services are developing, and the number of users of these services is increasing, which necessitates enhanced supervision by the NBG.

Based on the foregoing, the NBG's legislative mandate has been expanded. This includes, among other things, the prudential supervision of Virtual Asset Service Providers, capital adequacy, consumer rights protection, and the implementation of requirements for cybersecurity and operational risks.