18:29, 6 November 2023

YEREVAN, NOVEMBER 6, ARMENPRESS. Armenia’s Central Bank has unveiled its approaches to regulation and control over the issuance and turnover of virtual assets (crypto-assets).

The statement issued by Armenia’s Central Bank said that the central Bank is monitoring the developments in this area both in Armenia and globally in order to adequately respond to the risks arising along with the emergence of virtual assets.

"In 2018, the Central Bank issued a statement on virtual assets, informing the public about the high risk and danger of transactions with them. With the increasing turnover of virtual assets in recent years, a number of related problems have become evident," the statement reads.

''These problems include

– the growth of individuals’ investments in virtual assets occurs with insufficient protection of their interests, with unfair preservation of funds and unsatisfactory transparency of information, liquidity and pricing;

– the virtual assets market is characterized by a high degree of interconnection of different cryptosystems, vulnerable structures of vertical integration of functions accumulated in one organization or group, inappropriate management systems, significantly high level of liabilities, containing, among other things, clashes of interests of other persons and financial stability risks;

– the anonymity of virtual asset transactions and the volume of cross-border transactions increase the associated money laundering and terrorist financing risks;

– a number of services provided by virtual assets are similar in content to traditional financial services and therefore should be regulated by the same legislation, but in fact they operate outside the existing legislation, which creates an unequal competitive environment for traditional financial service providers.

International standardization organizations (IOSCO, FSB, IMF, BIS, FATF) have expressed a clear position, giving importance to the need for uniform and comprehensive regulation of virtual assets by all countries, due to the non-localized (virtual) nature of the virtual asset market and cross-border turnover.

''Taking into account the above, as well as global developments related to this sector, the Central Bank has initiated activities to develop and implement an effective model for comprehensive regulation and control of virtual assets.

For effective regulation, the Central Bank will adopt the principle of "same activity, same risk, same regulation", whereby virtual asset service providers offering services similar to traditional financial activities should be regulated in the same manner.

Regulation will allow for an adequate response to existing and potential risks in virtual assets, while creating a clear legal framework for the development of related innovation and technology,'' reads the statement.