National Bank of Georgia authorizes issuance of stablecoin

TBILISI. March 10 (Interfax) - The National Bank of Georgia (NBG) has authorized resident companies to issue stablecoins in the local currency, the lari, and foreign currencies, the regulator said.

In accordance with the NBG resolution, the "Regulation on the Initial Placement of a Stable Virtual Asset by a Virtual Asset Service Provider" has been approved, regulating the initial placement and circulation of stablecoin.

According to the document, the issuance of stablecoin in Georgia will only be possible with the prior written consent of the National Bank. Companies will also be required to register as virtual asset service providers.

A minimum regulatory capital of 500,000 lari [$182,000 at the current exchange rate] has been established for stablecoin issuers. The issuing company is required to publish the results of quarterly audits by independent auditors.

Stablecoin holders have the option to sell the asset at any time at par within three business days of the issuer receiving a redemption request.

According to the document, stablecoin in circulation must be 100% backed by the issuer's reserve assets.

The document explains that stablecoin is a type of virtual asset whose price is pegged to a predetermined asset, and the issuer is obligated to maintain its stability. Unlike other cryptocurrencies, whose price fluctuates depending on market supply and demand, the price of a stablecoin must remain constant.

One of the most widely used stablecoins in the world is USDT, which is worth one U.S. dollar, and whose issuing company is obligated to fully reserve the funds received from users.

The NBG reported that in preparing the document, legislative mechanisms used in the U.S. (Genius Act), the European Union (MiCA), the United Arab Emirates (VARA), the legislation of the UK and Singapore, and recommendations of the World Bank and the Organization for Security and Cooperation in Europe were used.