Virtual-asset lending is a recognised VASP activity, but the permitted borrower perimeter matters: the Georgian VASP framework prohibits lending virtual assets to natural persons.
We analyse borrower status, product economics, source and custody of assets, collateral, valuation, margin and liquidation mechanics, conflicts, AML/KYT controls and whether the proposed company would also conduct unrelated activities outside the permitted VASP business perimeter.
Regulatory classification
The model should be framed as lending of convertible virtual assets within the VASP perimeter and tested against the prohibition on lending to natural persons. A yield, deposit-like or pooled funding product may require additional analysis rather than being treated automatically as ordinary business lending.
- Borrower eligibility
- Collateral and custody
- Valuation, margin and liquidation
- Funding source and activity perimeter
Confirm the borrower and product perimeter first
Before drafting lending documents, identify who may borrow, what asset is advanced, how the lender sources it, whether collateral is controlled by the VASP or a third party, how interest and fees accrue and what happens at margin, default and liquidation.
Required lending evidence
The operating file should cover legal-entity onboarding, authority and beneficial ownership, credit/counterparty assessment, collateral ownership, wallet control, valuation sources, margin thresholds, liquidation approvals, sanctions/KYT screening, accounting and exception records.
Principal control risks
Lending risk increases where natural-person access is not effectively blocked, collateral ownership is uncertain, valuation and liquidation rights are not operationally executable, funding resembles an unanalysed deposit or pooled product, or unrelated commercial activities are placed in the same VASP without perimeter analysis.
A VASP is not a general-purpose operating company
The NBG states that a VASP is generally limited to virtual-asset services, activities necessary for providing them and exchange of its own virtual assets. Unrelated software, consulting, trading or other commercial activities should therefore be structured deliberately rather than added to the VASP by default.
Supervisory capital
Permitted business crypto-lending activity falls within the GEL 250,000 minimum-capital category. Capital adequacy must be planned alongside liquidity, collateral, counterparty and operational risk; at least 75% of the minimum must consist of primary capital.
Scope of our engagement
Our lending work can cover borrower and activity-perimeter analysis, loan and collateral architecture, custody and wallet controls, valuation and margin methodology, liquidation governance, funding-source review, AML/KYT controls, application evidence and operational implementation. We assess yield or pooled structures separately where their features go beyond ordinary B2B lending.
Borrower perimeter
Restrict the product to legally permissible counterparties and make eligibility enforceable in onboarding and systems.
Collateral mechanics
Document ownership, custody, valuation, margin thresholds, liquidation authority and the operational ability to act on default.
Business perimeter
Separate VASP lending from unrelated company activities and analyse any funding or yield feature that may create another regulatory question.
Business crypto-lending chain
A practical sequence used to test whether contracts, systems, providers and control ownership describe the same service.
Issues to resolve before filing
No. Order No. 94/04 prohibits a VASP from lending virtual assets to natural persons. The product, onboarding and system rules should therefore prevent natural-person borrowing rather than rely only on contractual wording.
No automatic conclusion should be assumed. The borrower must be eligible, the activity must fit the VASP perimeter and the funding, collateral, custody, yield and other product features should be analysed for additional regulatory issues.
Define ownership, wallet control, eligible collateral, valuation sources, haircuts, margin thresholds, notice, liquidation authority, execution venues, conflicts, proceeds application and recordkeeping. The VASP should be able to demonstrate that the contractual rights can be executed operationally.
Not automatically. A fixed-yield, pooled or funding product can change the economic and legal analysis. Before launch, review who provides the assets, whether claims are pooled, how returns are generated, liquidity/redemption promises and any financial-instrument or other regulatory overlap.
The NBG states that a VASP is generally limited to virtual-asset services, activities necessary to provide them and exchange of its own virtual assets. Unrelated business lines should therefore be reviewed and, where appropriate, separated rather than assumed to be permissible inside the VASP.
