It has been a long debate among regulators worldwide on whether cryptocurrencies should be regarded as commodities like Gold and Silver or as currencies like USD and GBP. The question is particularly important because it decides the future of crypto and crypto trading.
Taking a stand on the matter, Georgia has waived off VAT on crypto trading, which confirms the fact that the country considers cryptocurrencies as general currencies and commodities. The decision was made via a new bill, which aims at regulating cryptocurrencies in the country. As per the new bill, people of Georgia will be able to buy, sell, exchange, and store cryptocurrencies without paying taxes. However, the bill strictly states that digital coins are not legal tender, and cannot be used for making payments, though exchanging is permitted.
The new bill defines cryptocurrencies as follows:
The European Court of Justice had ruled in 2015 that cryptocurrencies will not be subject to VAT. However, many countries in Europe still do it. Georgia joins the UK in deeming crypto as foreign currency, moving away from imposing a value-added tax on goods and services purchased.
Exemption from taxes will encourage more and more people from the South Caucasian nation to make investments in crypto. Also, cheap electricity generated in abundance by several hydropower plants in Georgia will make crypto miners think about shifting base to the country, which could boost trade in the region. Though exemption from VAT will heavily benefit crypto trade, it is expected that regulators might come up with some new taxes and regulations suitable for digital currencies.