Dear Representatives of the Central Bank,<\/p>\n
Given the strategic importance of the sector for the Republic of Armenia \u2014 in terms of technological innovation, attracting investment, and exporting services \u2014 we hereby present our observations and recommendations for refinement, aimed at ensuring the achievement of three key objectives: legal predictability, competitiveness, and consumer\/state protection.<\/p>\n
<\/p>\n
1) Centralization of Oversight<\/strong><\/p>\n Issue. Under the draft, the Central Bank becomes the sole licensing and supervisory authority in the sector, whereas the crypto ecosystem also encompasses non-financial technological components (blockchain infrastructures, software services).<\/p>\n Why this is problematic. Excessively broad powers concentrated in a single authority increase the administrative burden, exacerbate transitional risks, and reduce flexibility in technologically innovative segments.<\/p>\n Proposal.<\/em> <\/p>\n 2) Legal Certainty and Boundaries of Delegation<\/strong><\/p>\n Issue. A significant part of the key criteria is left to by-laws (capital requirements, information security, refusal\/suspension\/revocation).<\/p>\n Why this is problematic. Rules should be enshrined in the law itself, not in amendable regulations, otherwise the risk of arbitrariness and investment uncertainty increases.<\/p>\n Proposal.<\/em> <\/p>\n 3) Economic Normative (capital, liquidity, reserves)<\/strong><\/p>\n Issue. Thresholds are absent or deferred to future acts, adding uncertainty.<\/p>\n Why this is a problem. Proposal.<\/em> <\/p>\n 4) \u201cFit-and-Proper\u201d Criteria for Managers<\/strong><\/p>\n Issue. Terms such as \u201cnegative reputation\u201d or \u201cunrealistic business plan\u201d lack legal precision and may be applied subjectively.<\/p>\n Why this is problematic. The absence of measurable criteria leads to arbitrary interpretation, litigation, and investment risk.<\/p>\n Proposal.<\/em> <\/p>\n 5) Law on Cashless Payments<\/strong><\/p>\n Issue. Mandatory routing of all transactions through bank accounts\/in cashless form contradicts the P2P nature of crypto, restricts tourists and the offline OTC segment, since banks often refuse to service such flows or impose high fees.<\/p>\n Why this is a problem. Proposal.<\/em> <\/p>\n 6) AML\/CFT and Sanctions Compliance (brief)<\/strong><\/p>\n Proposal.<\/em> <\/p>\n 7) Refusal, Suspension, and Revocation of Licenses<\/strong><\/p>\n Issue. Formulations such as \u201cin the reasoned opinion of the Central Bank\u2026\u201d, \u201cmaterial breach\u201d, \u201cproper service delivery\u201d are vague and subjective.<\/p>\n Why this is a problem. Without measurable thresholds, they grant overly broad discretionary powers.<\/p>\n Proposal.<\/em> <\/p>\n 8) Transitional Provisions (sandbox)<\/strong><\/p>\n Issue. The approach \u201cone year to apply, but operations are prohibited\u201d undermines market continuity.<\/p>\n Why this is a problem. Existing businesses face the risk of complete income loss due to closure or client outflow.<\/p>\n Proposal.<\/em> <\/p>\n Conclusion<\/strong><\/em><\/p>\n We support regulations that balance innovation and protection. The above refinements will reduce legal uncertainty, ensure a competitive environment, foster the growth of the legal market, and safeguard the interests of consumers and the state without excessive bureaucracy.<\/p>\n We stand ready to participate in working group sessions, provide technical\/operational details, and share sandbox testing data.<\/p>\n Thank you for your attention.<\/p>\n Respectfully, Dear Representatives of the Central Bank, Given the strategic importance of the sector for the Republic of Armenia \u2014 in terms of technological innovation, attracting investment, and exporting services \u2014 we hereby present our observations and recommendations for refinement, aimed at ensuring the achievement of three key objectives: legal predictability, competitiveness, and consumer\/state protection. […]<\/p>\n","protected":false},"author":1,"featured_media":1307,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54],"tags":[],"class_list":["post-1316","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-regulation-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/1316","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/comments?post=1316"}],"version-history":[{"count":2,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/1316\/revisions"}],"predecessor-version":[{"id":1318,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/1316\/revisions\/1318"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/media\/1307"}],"wp:attachment":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/media?parent=1316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/categories?post=1316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/tags?post=1316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\u2013 Establish a decentralized model.
\nCentral Bank \u2014 in cases where a crypto asset is effectively a security\/financial instrument.
\nSpecialized unit\/commission (under the Ministry of Economy or the Ministry of High-Tech Industry) \u2014 licensing of technological\/operational services unrelated to securities (e.g., platform operation).
\n\u2013 Introduce a permanent mechanism for issuing joint guidelines to ensure the market receives consistent and non-contradictory interpretations.<\/p>\n
\n\u2013 Enshrine directly in the law: minimum capital thresholds by type of service, objective \u201cfit-and-proper\u201d criteria for managers, clear grounds and procedures for refusal\/suspension\/revocation of licenses, and a supervisory response scale (supervisory ladder).
\n\u2013 Limit by-laws to methodologies and technical guidelines only.<\/p>\n
\n\u2013 Excessively high thresholds may monopolize the market.
\n\u2013 Excessively low thresholds may endanger customer interests.
\n\u2013 For small\/start-up companies, the entry barrier becomes insurmountable.<\/p>\n
\n\u2013 Establish proportionate thresholds by service type, e.g.:
\n\u2022 intermediaries \u2014 low,
\n\u2022 exchange platforms \u2014 medium,
\n\u2022 custodial services \u2014 high.
\n\u2013 Ensure thresholds safeguard client funds and interests.<\/p>\n
\n\u2013 Enshrine measurable indicators in the law: criminal conviction, major disciplinary violations, undisclosed conflict of interest, culpable misconduct.
\n\u2013 Assess business plans using a clear methodology (stress test, risk matrix, profitability benchmarks).
\n\u2013 Establish a clear procedure and deadlines for appeals.<\/p>\n
\n\u2013 Costs increase and transfers slow down.
\n\u2013 The core value of crypto \u2014 speed and accessibility \u2014 diminishes.
\n\u2013 A \u201cde facto\u201d ban arises via refusal to open accounts or unjustified rejections by banks.<\/p>\n
\n\u2013 Introduce threshold exemptions for P2P\/cash operations with risk-based AML\/KYC:
\n\u2022 \u2264 USD 5,000 \u2014 simplified identification,
\n\u2022 USD 5,000\u201325,000 \u2014 full KYC, source of funds verification, mandatory reporting,
\n\u2022 > USD 25,000 \u2014 enhanced due diligence, Travel Rule (VASP\u2194VASP).
\n\u2013 Allow crypto-ATMs\/OTC points with simplified licensing, separate reporting regime, and daily\/monthly limits.
\n\u2013 Guarantee banking access: mandatory substantiated response to account opening\/servicing requests within 15 business days; in case of refusal \u2014 written justification with clear legal references.
\n\u2013 Clarify terminology: apply \u201ccashless\u201d only to bank settlement transactions, regulate on-chain P2P transfers separately through AML\/KYC threshold rules.
\n\u2013 Transparency: open APIs\/reporting formats for P2P\/OTC points, use of \u201cwhite\/black\u201d lists, transaction log retention in line with personal data protection standards.<\/p>\n
\n\u2013 Tiered AML\/KYC based on transaction size\/frequency (simplified \u2192 standard \u2192 enhanced).
\n\u2013 Minimum blockchain analytics standard (risk scoring, sanctions screening), prompt alert review, log retention \u2265 5 years.
\n\u2013 Travel Rule (VASP\u2194VASP): standard data package, API connection, logging; for unhosted wallets \u2014 address ownership confirmation.
\n\u2013 White\/black lists of trusted platforms and high-risk addresses, regular updates and automated checks.
\n\u2013 Reporting: prompt STR\/SAR, monthly AML summary to regulator, annual independent audit.<\/p>\n
\n\u2013 Establish clear and measurable grounds:
\n\u2022 \u201cmaterial breach\u201d = \u2265 2 identical violations within 12 months, or \u2265 Y dram direct damage, or \u2265 Z clients affected;
\n\u2022 \u201cdisruption of proper service delivery\u201d = outage \u2265 X hours with significant impact (e.g., \u2265 10% of clients).
\n\u2013 Before suspension \u2014 mandatory \u201chearing\u201d (within 10 business days), remediation plan with specific steps and \u2264 60 days deadline.
\n\u2013 Transparency\/appeal: mandatory publication of decisions with references to applied norms, expedited appeal (30 days administrative, 30 days judicial).<\/p>\n
\n\u2013 Introduce a sandbox regime for up to 24 months (or until a final licensing decision, whichever is earlier) for companies operating legally before 2025.
\n\u2013 Within the sandbox, allow operations subject to periodic reporting, restrictions on high-risk services, and mandatory minimum AML\/KYC package.
\n\u2013 Eligible participants \u2014 both legal entities and individual entrepreneurs (considering local challenges with bank account opening).<\/p>\n
\nArmcoincrypto.am<\/p>\n","protected":false},"excerpt":{"rendered":"