Armenia is taking its first steps toward regulating the crypto sector, with the adoption of a new law on crypto assets as well as a package of amendments to existing legislation, a statement from the prime minister’s office said on February 27. 

Finance Minister Vahe Hovhannisyan said on February 27 that the legislative changes will “enable the crypto-asset sector to create a predictable environment with clearly defined rights and responsibilities of operators, sufficient mechanisms to protect customer interests and transparent market operations”, according to a statement on his Facebook page.

 

Hovhannisyan added that as the volume of crypto transactions grows, public participation in the sector has increased significantly, both globally and in Armenia, reported Arminfo. However, until now the absence of a legal framework has led to various issues, including challenges in providing crypto-related services, regulatory cooperation, and establishing stable relationships with clients and investors.

The minister highlighted multiple risks associated with the sector, including inadequate consumer protection mechanisms and concerns over potential misuse of crypto assets for money laundering and terrorist financing. Additionally, the continued expansion of crypto transactions poses financial stability risks. Weak regulatory responses to these threats have hindered the sector’s development, making it difficult to attract clients, provide high-quality services, and enable investments in newly issued crypto assets. Furthermore, concerns over illicit activities have limited the integration of the crypto ecosystem with the broader financial system.

Recognising the urgency of addressing these challenges, the government aims to implement a comprehensive regulatory model that will support the sector’s development while mitigating existing and potential risks. 

“The regulation will allow for the formation of a clear legal framework. At the same time, effective mechanisms for protecting the interests of customers will be created,” the statement from the prime minister’s office said. 

Once adopted, the framework will introduce well-defined legal parameters for crypto assets and their underlying technologies. It will also create favourable conditions for sector innovation, particularly in distributed ledger technologies, and establish clear rules for market participants. This approach aims to foster long-term planning for crypto-related activities in Armenia and attract international players to the sector, said Hovhannisyan, as reported by Arminfo. 

The regulation will introduce strong consumer protection measures, including mechanisms to prevent conflicts of interest, complaint handling procedures, safeguards for client funds, and transparency requirements. Clients will have access to professional services, essential decision-making information, financial ombudsman services, and other legal protections.

Under the new regulatory framework, the Central Bank of Armenia will have enhanced oversight powers to monitor sector activities, respond to financial stability concerns, combat money laundering and terrorist financing, and collaborate with international regulatory bodies. This initiative is expected to bolster Armenia’s reputation in global financial markets.