Suppose a situation where your crypto assets have been held for years on an exchange registered in Tbilisi, and one day you learn that the National Bank has revoked this platform's registration. The account is inaccessible, no one answers your withdrawal requests, and the company's legal address turns out to be an empty office.
This scenario is not theoretical in Georgia. It is no longer just a hypothetical event, the country is one of the most attractive jurisdictions for the crypto industry in the region, with a light tax regime and a relatively simple registration procedure. That is precisely why the question is being asked more and more often: if an exchange loses its right to operate and users' assets disappear, who bears responsibility for this, and does the user have any real leverage left at all.
Registration vs. License, and What the NBG Actually Checks
The first clarification that needs to be made is that crypto exchanges in Georgia technically do not hold a "license" in the classical sense, as, for example, players in the banking sector do. The legislation refers to them as "virtual asset service providers," which are subject not to licensing but to registration with the National Bank, based on a regulation approved by the President of the NBG in June 2023. When people talk about "losing a license," what they practically mean is precisely the cancellation of this registration.
It is important to remember what this regime was created for in the first place. Its main purpose is the prevention of money laundering and terrorism financing, in accordance with FATF standards. The NBG checks the reliability of the provider's administrators and beneficial owners, internal control systems, and accountability mechanisms. The grounds for cancelling registration may be precisely a violation of these requirements: inadequate control over suspicious transactions, failure to fulfill reporting obligations, or unsuitability of an administrator.
This is where, arguably, the most important problem lies hidden: registration is regulated in order to prevent the system from being used to launder criminal proceeds, not in order to protect users' assets in the event of insolvency or unlawful appropriation. Being on the NBG's register gives the user no guarantee whatsoever that their assets are safely stored, it simply means that the company meets AML/CFT requirements.
Why the Deposit Insurance Logic Does Not Work for Crypto
Users often intuitively equate crypto assets with a bank deposit and assume that a similar protection mechanism exists here too. In reality, this is not the case. The deposit insurance system operating in Georgia protects an individual's bank deposit up to GEL 50,000 in the event of the liquidation of a commercial bank or microbank, but this system applies only to licensed banks and microbanks and has no connection whatsoever to crypto assets. If an exchange goes bankrupt or ceases operations, the user simply has no grounds for demanding compensation from the state.
The cancellation of registration does not in itself release the company from the obligations it has undertaken toward the user. The relationship between the exchange and the user is mostly contractual in nature: the user transfers the asset to the platform for the purpose of storage and/or management, based on the terms of service. If the company fails to fulfill this obligation and cannot return the assets belonging to the user, this constitutes a breach of contractual obligation and provides grounds for a civil claim for damages. The problem, however, is that actually enforcing this claim depends on whether the company has any assets left at all from which satisfaction could be obtained, even a won court case often remains only on paper.
If the company cannot fulfill its obligations, the Law on Rehabilitation and Collective Satisfaction of Creditors applies, Georgia's modern insolvency regime. Here one issue is decisive: whether users' assets were kept segregated from the company's own balance sheet, or mixed into a common pool. If the exchange kept users' crypto assets in separate wallets, clearly segregated from its own capital, and this can be proven, there is an argument that these assets do not enter the company's bankruptcy estate at all, and the user has a priority right to their return compared to ordinary creditors. But if the assets were mixed, which, unfortunately, is more common than the exception among crypto exchanges, the user loses this privileged status and joins the list of ordinary creditors, where they compete with the state, banks, and other creditors. In practice, this often means that the amount recoverable is minimal or nonexistent.
Civil Liability, the Contractual Basis
An additional problem is created by the fact that the legal classification of digital tokens and their ownership is still not specifically regulated in Georgia. There is no clear norm in the legislation as to whether a crypto asset is the user's property, or merely a contractual claim against the platform, and this uncertainty directly affects how the user's claim will be classified in bankruptcy proceedings.
If it turns out that the company's management knowingly used users' assets to cover its own obligations, or that the platform operated from the outset under a scheme that precluded the withdrawal of users' funds, the discussion is no longer confined to civil liability alone, in such cases the question of signs of embezzlement or fraud may arise. However, this path requires far more time and a far larger evidentiary basis than a simple civil claim, and it still does not guarantee the user a quick return of funds.
Since no state guarantee exists, the entire burden effectively shifts to individual legal protection. The user must first immediately record their claim: through a written demand, and by preserving account history and documentation confirming the transactions. If the company does not respond, reaching a resolution through the courts becomes almost inevitable, especially if insolvency proceedings are already underway in parallel, where timely registration of the claim in the creditors' queue is the only way to have any chance at all of recovering anything.
What the User Can Practically Do
Ultimately, the cancellation of a crypto exchange's registration in Georgia does not automatically mean a guaranteed right to compensation for the user, although this does not mean that no responsible party exists at all. Liability may fall on the company itself on a contractual basis, and in certain cases on its management personally, if it is established that the assets were abused, but this liability actually becomes enforceable only if the user acts promptly and correctly, and only if any assets remain at all from which satisfaction can be obtained. The clearest gap in the existing system is that NBG registration is not aimed at protecting users' assets at all, it only monitors compliance with AML/CFT standards. Until a special framework emerges in the country for the mandatory segregation and protection of users' assets, placing funds on a crypto exchange remains a risk that, unlike a bank deposit, has no state safety net whatsoever.