Cryptocurrencies are increasingly becoming very popular in Georgia and the fintech world at large. With many new individuals getting interested in making investments in bitcoin. Crypto is so popular in Georgia that it ranks the third-largest crypto mining country in the world. For many years in a row, Georgia has held this position. What makes it an unattractive destination for mining is simply because electricity is cheap, there are no restrictions, there are tax breaks, and enough data about cash flow around the world. These factors have been a source of attraction not only to Georgians but to foreign investors as well. According to statistics from the World Bank, more than 200,000 individuals were involved in crypto mining in Georgia in 2018.
How it all began
Georgia was greatly influenced by US-based crypto companies in the region. The Eastern regions of Georgia are known for their production of wine, but this is not the only activity the region is known for. A lot of crypto mining centers are located in the region as well, including US tech company Bitfury. Although the government cautioned the general public to be careful with cryptos, it is very welcoming of digital currencies. While the government is of the opinion that caution is taken, political parties raised campaign money through crypto mining.
Georgian crypto laws
Also, the country’s economy has been another point of influence, which led Georgia’s Minister of Finance, Nodar Khaduri to sign a taxation bill on cryptos. The following points were included in the bill;
- Those in Georgia are exempted from income tax on the proceeds from their crypto sales.
- There is no VAT for the exchange of cryptocurrency to Georgian Lari (GEL).
- Also, the sale of hashes abroad is no subject to VAT.
- Georgia citizens abroad should pay VAT on the purchase of a hash.
The Georgian Minister of Finance stressed the fact that cryptos will in no way be considered as legal tender in the country, and the Georgian Lari will remain the country’s main currency fr payments, and that it is illegal for individuals to buy goods using cryptos in the country. These measures taken by the Minister to regulate cryptocurrencies are a reflection f what other countries are currently doing. In Georgia, the gambling culture is very rampant. And as time goes by a lot of online craps in Georgia will definitely start incorporating the use of cryptos to execute payments on their platforms, and there is no doubt that blockchain will revolutionize their processes, given that the regions are such a renowned crypto mining hub.
How is the cryptocurrency used in Georgia?
Since the regulations around the exchange of cryptocurrencies are more cautious, citizens can’t use it to buy goods or exchange it for local currency, the focus is more on cryptocurrency mining for bitcoin and some other digital currencies. The world Bank recommends that Georgia follows with gusto. They are of the opinion that Georgia can use blockchain technology to make its services better. Surveys showed that 5% of homes in the country were involved in cryptocurrency mining activities.
All these favorable are increasing making Georgia more popular on the crypto mining ranks. Especially because everything is so cheap and accessible without any restrictions or high tax rates. Large companies always prefer countries with cheap electricity and little or no taxes on cryptocurrencies. With BitFury actively operating in the region, Georgia is gradually becoming a global hub for crypto mining.
What does the future hold for cryptocurrency in Georgia?
Experts anticipate that many locally registered crypto companies in Georgia might move their operations to register in other countries in order to fully take advantage of tax-free incentives with crypto mining in the country while keeping their local operations in Georgia. Although several countries in Europe are still trying out blockchain technology, Georgia has remarkably been ahead of its blockchain game and is one of the countries in Eastern Europe that first adopted cryptocurrencies. They also seek a platform for the digitization of public service as well. As usual, the goal is to make these processes more transparent and create a high level of accountability.
Many nations are surprised by the expertise and interest of Georgia in the mining sector and because of the favorable conditions of the operations, a lot of people could start getting into the cryptocurrency business. According to the World Bank, if the government of Georgia fully adopts blockchain, citizens and companies will follow suit. And the truth of the matter is that blockchain only makes these processes easier.