The Central Bank of Armenia has initiated measures for the development and implementation of an effective model of comprehensive regulation and control of virtual assets.
In order to adequately respond to the risks arising along with the emergence of virtual assets, the Central Bank monitors the developments of the field of virtual assets both in Armenia and in the world, the Central Bank of Armenia said in a statement today.
In 2018, the Central Bank issued a statement on virtual assets, informing the public about the high risk and danger of transactions with virtual assets.
According to CBA, In recent years, a number of problems related to virtual assets have become apparent, including:
- the growth of individuals’ investments in virtual assets occurs in the conditions of insufficient protection of their interests, accompanied by unscrupulous preservation of funds and insufficient transparency of information, liquidity and pricing,
- the field of virtual assets is characterized by a high degree of interconnection of different cryptosystems, vertically integrated vulnerable structures of functions in a single organization or group, inadequate management systems, high level of liabilities, containing, among others, risks of conflicts of interest and financial stability,
- the anonymity of virtual asset transactions and the volume of cross-border transactions increase the risks of money laundering and terrorist financing associated with them,
- a number of services provided by virtual assets are similar to traditional financial services in their content, therefore should be regulated by the same legislation, but actually operate outside the current legislation, which creates an unequal competitive environment for traditional financial service providers.
The CBA says international standard-setting organizations (IOSCO, FSB, IMF, BIS, FATF) have expressed a clear position emphasizing the need for unified and comprehensive regulation of virtual assets by all countries due to the non-localized (virtual) nature of the virtual assets market and cross-border circulation.
Taking into account the above, as well as global developments related to this field, the Central Bank has initiated measures for the development and implementation of an effective model of comprehensive regulation and control of virtual assets.
For effective regulation, the Central Bank will adopt the “same activity, same risk, same regulation” principle, according to which virtual asset service providers that offer services similar to traditional financial activities should be regulated in the same way.
The regulation will enable an adequate response to the existing and possible risks in the field of virtual assets, while creating a clear legal framework for the development of innovations and technologies in the field of virtual assets.
