The National Bank of Georgia (NBG) has issued the rules for the Liquidation of Virtual Asset Service Providers (VASP), establishing a regulatory framework for the liquidation of virtual asset service providers in Georgia. The new legal framework governs entities that manage, exchange, store or otherwise provide services in relation to virtual assets under the supervision of the NBG.
The principal objective is the protection of consumers, creditors and the broader financial market. Since digital assets may be volatile, the failure of a VASP may pose significant risks. Considering this the NBG has responded by issuing the Rules for the Liquidation of Virtual Asset Service Providers (The Rules), which came into effect on 1 September 2028. The Rules establish detailed requirements for the liquidation procedure and related consumer-protection safeguards, including the liquidator’s qualifications, powers, duties and liabilities, creditor-protection provisions and other procedural requirements.
- Liquidation begins when the NBG revokes a VASP’s registration and appoints a liquidator.
- All management powers pass to the liquidator, but major decisions require NBG approval.
- Client assets may be transferred to another licensed VASP, capped at 10% of its total assets.
- Physical assets are independently valued and sold through public e-auctions.
- Unclaimed assets are held at the NBG and cannot be used to satisfy general debts.
Initiation of Liquidation Process
The liquidation process is triggered by the revocation of the VASP’s registration by the NBG. Upon revocation, the NBG issues an individual administrative-legal act, in the form of an order by the NBG President or Vice-President, which simultaneously initiates the liquidation process and appoints the liquidator. The purpose of the liquidation is to realize the provider’s assets and satisfy the claims of its creditors, with the NBG retaining supervisory control throughout. Notably, all pending enforcement proceedings against the provider are automatically suspended upon commencement of the liquidation.
Liquidator
The NBG directly appoints the liquidator, who must:
Clean Recordnot have been convicted of a serious or especially serious crime, terrorism financing, money laundering or another economic crime
Higher Educationhold a higher education degree in economics, finance, banking, business administration, auditing or accounting
Professional Experiencehave at least two years of professional experience in the financial or virtual asset services sector
Powers and Restrictions of the Liquidator
Once appointed, all managerial powers held by the VASP’s directors and governing bodies transfer to the liquidator. The liquidator becomes the sole authorized representative of the company in its relations with third parties. Any transaction entered into by former executives after the liquidation order takes effect is legally void.
The liquidator has the authority to file lawsuits, settle ongoing litigation or arbitration proceedings, terminate existing contracts and negotiate necessary transactions on behalf of the provider.
However, major decisions still require prior approval from the NBG. For example, the liquidator is not authorized to transfer assets and liabilities to other VASPs, convert virtual assets into fiat currency, obtain loans or manage reserve assets without the NBG’s express consent.
Timeframe
The liquidator has a limited period to secure the provider’s assets. Within 10 calendar days, the liquidator must notify public registries, law enforcement authorities, commercial banks and other VASPs or relevant financial-sector entities to prevent the provider’s real estate, bank accounts, reserve assets and digital wallets from being transferred or used without authorization.
The liquidator then has three months to prepare an inventory of all assets and liabilities. During that period, creditors and users are notified and given one month to submit their claims. If volatile virtual assets are at risk of losing value, the liquidator may convert them into fiat currency, but only with the NBG’s approval.
Secure Assets
Notify registries, authorities, banks and VASPs
Creditor Claims
Creditors and users submit claims
Inventory
All assets and liabilities recorded
Auction Approval
NBG approval before any e-auction
Fulfilling Claims and Transferring Assets
Before satisfying any claims, the liquidator must conduct sanctions screening against United Nations watchlists. Once the screening is complete, customers may receive their payouts in cash or virtual assets, as agreed by the parties.
Where possible, the liquidator will transfer clients’ virtual assets to another licensed local VASP to maintain continuity of services. To ensure that the receiving platform is not unduly burdened, such transfers may not exceed 10% of that VASP’s total assets. Preference shall be given to platforms with their own secure custody infrastructure.
When assets and liabilities are transferred to another financial institution or VASP, customer consent is deemed to have been given unless the relevant person objects within the period specified by the liquidator. The liquidator may also consolidate identical virtual assets held by a single customer across multiple accounts into one unified claim.
If no local provider is able to accept the assets, they shall be returned directly to the relevant users. Where a user cannot be identified, the assets shall be converted into cash and deposited into an unclaimed-assets account at the NBG.
Unclaimed assets are subject to special protection. If a customer does not claim their funds before the liquidation period closes, those assets are segregated and held at the NBG. They may not be used to satisfy general debts.
Public Electronic Auctions and Independent Valuation
Physical assets, including real estate, equipment and hardware, are sold through public electronic auctions on www.eauction.ge with a view to maximizing recoveries for creditors. The liquidator conducts the auction and must obtain NBG approval at least 14 calendar days in advance.
An independent auditor must value all physical assets before they are offered at auction. The liquidator selects the auditor, subject to written confirmation by the NBG. To avoid conflicts of interest, any person with financial, personal or professional ties to VASP, its managers, major shareholders or principal creditors is disqualified. An auditor that audited the VASP in the prior financial year is automatically disqualified. If an auditing firm is engaged, internal safeguards must ensure that any staff who previously worked with the provider are excluded from the valuation team.
Completing Liquidation
Liquidation may be completed through one of the following three pathways:
Standard Completion
Liquidation is completed once all creditor claims have been paid and all legal disputes have been resolved. Any remaining assets shall be transferred to the provider’s shareholders.
Insolvency Transition
If the provider remains indebted but has exhausted its assets, or if its remaining assets have no value, the liquidator files a final report with the NBG. With NBG approval, the liquidator may petition the court for bankruptcy, thereby ending the regulatory liquidation process.
Corporate Restructuring
In exceptional cases, a VASP under liquidation may change its business purpose with NBG consent and the notarized approval of all remaining creditors and may then continue operating as a regular non-financial business outside the VASP regulatory framework.
Once liquidation is finalized, the NBG issues an official order to remove the company from the public registry. The liquidator, together with the liquidation commission, if established, destroys the provider’s and its structural units’ seals and stamps and submits the destruction act to the NBG.
NBG Supervision and Liquidator Liability
The NBG maintains close supervision throughout the process. The NBG may inspect the VASP or the liquidator at any time, request progress reports, set aside liquidator decisions that harm creditors or replace the liquidator.
The liquidator may incur personal liability for the following:
- unnecessary delays or financial irregularities during the liquidation;
- failure to report the theft of assets by former managers to law enforcement authorities;
- misuse of loans obtained from banks or other financial institutions;
- misrepresentation of assets, maintenance of improper books or submission of inaccurate reports;
- failure to bring proceedings against uncooperative debtors to recover amounts owed;
- unethical or unfair treatment of customers.
At the same time, the law protects liquidators who act in good faith. Under the applicable safe-harbor protections, liquidators bear no personal liability for actions taken honestly and within the scope of their legal authority.
The framework established by the Rules for the Liquidation of Virtual Asset Service Providers represents a significant development in the regulation of Georgia’s virtual asset sector. The NBG’s continuing supervision and the Rules’ liability framework further support an orderly and accountable liquidation process. These measures bring Georgia’s framework into closer alignment with international standards and are expected to support confidence in the country’s virtual asset market.
Facing VASP Liquidation or NBG Scrutiny?
Andersen’s regulatory team advises providers, creditors and investors on every stage, from registration revocation to final completion.