ArmInfo."We are making the first attempt to regulate the crypto currency sector. It will not be ideal, but it is an important step," Prime Minister Nikol Pashinyan said on February 27 at a regular Cabinet meeting of the Government, after Finance Minister Vahe Hovhannisyan presented a package of bills on amendments and additions to the law "On Crypto Assets" and a number of related laws.
According to Hovhannisyan, the growth of the crypto assets sector has seen a notable increase in public involvement in many countries, including Armenia. However, the lack of a regulatory framework has resulted in legal issues related to offering services involving crypto assets, engaging government agencies, and establishing long-term and stable relationships with clients and investors.
The Minister highlighted that along with the growth the crypto asset sector, various risks have emerged,. They are largely due to the lack of adequate mechanisms in place to safeguard clients interests and the potential misuse of crypto assets and their underlying technologies for illicit activities like money laundering and terrorist financing. Moreover, the increasing volume of crypto asset transactions poses risks to financial stability. Failing to address these risks hinders the development of the sector, as it limits client acquisition, service quality, investment opportunities in new crypto assets. Additionally, it impedes the integration and collaboration between the crypto ecosystem and the financial system.
As a result of adopting the project package, a clear regulatory framework will be established in the crypto- asset sector. This framework will define rights and obligations of entities operating in the sector, provide mechanisms to protect client interests, and ensure transparent market operations. The regulation will also create a clear legal framework for crypto-assets and their underlying technologies, fostering development and innovation (in distributed ledger technologies). It will set clear rules of the game for entities in the sector, laying the foundation for long-term planning related to crypto-assets in the Republic of Armenia. Hovhannisyan emphasized that this will attract international players to the sector.
Additionally, he highlighted the importance of creating effective mechanisms to protect the interests of clients, including procedures for preventing conflicts of interest, receiving and addressing complaints and claims from clients, safeguarding clients' funds, establishing rules of conduct, publishing necessary information and meeting other requirements to ensure transparency. Clients will have access to professional services, receive essential information for decision-making, contact the financial ombudsman if needed, and use other available opportunities to protect their interests. Under the regulation, the Central Bank of Armenia will be able to receive the necessary information on sector activities, respond appropriately to financial stability, combat money laundering and terrorist financing, and address other risks. The Bank will also cooperate with regulatory and supervisory authorities of other countries, and international organizations, ultimately enhancing the country's reputation.
