Albania -- Stablecoin Regulations Regulatory Overview

Albania has taken a relatively unique approach to regulating virtual assets, including stablecoins, with the enactment of a specific law dedicated to the technology rather than solely classifying tokens under existing financial legislation.

Here's an overview of the regulatory framework for stablecoins in Albania:

Primary Legislation

The core of Albania's regulatory framework for virtual assets, including stablecoins, is:

• Law No. 110/2020 "On Financial Markets Based on Distributed Ledger Technology" (Ligji Nr. 110/2020 "Për Tregjet Financiare të Bazuara në Teknologjinë e Regjistrave të Shpërndarë"). This law came into effect in September 2020 and is one of the few standalone comprehensive crypto laws globally.

Other relevant laws include:

• Law No. 9918/2008 "On Payment Services" (Ligji Nr. 9918/2008 "Për shërbimet e pagesave"), which covers e-money.
• Law No. 9879/2008 "On Securities" (Ligji Nr. 9879/2008 "Për Titujt"), for potential classification as securities.
• Law No. 157/2014 "On the Prevention of Money Laundering and Terrorism Financing" (Ligji Nr. 157/2014 "Për parandalimin e pastrimit të parave dhe financimit të terrorizmit"), which extends to virtual asset service providers (VASPs).

Regulatory Authorities:

• Autoriteti i Mbikëqyrjes Financiare (AMF) - Financial Supervisory Authority: The primary regulator responsible for licensing and supervising entities operating under Law No. 110/2020.
• Banka e Shqipërisë (Bank of Albania): The central bank, responsible for monetary policy, financial stability, and supervision of payment systems and e-money institutions. It has also issued warnings regarding the risks of virtual assets.

Regulatory Framework for Stablecoins

1. Classification of Stablecoins (e-money/payment tokens/securities):

   • Law No. 110/2020 defines "virtual assets" broadly as a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes. It does not explicitly differentiate between stablecoins and other virtual assets based on their backing mechanism.
   • Instead of categorizing tokens directly, the law focuses on regulating the services provided using DLT.
   • However, a stablecoin could potentially fall under existing financial laws if its characteristics align.
     • E-money: If a stablecoin meets the definition of e-money under Law No. 9918/2008 (i.e., electronically stored monetary value, representing a claim on the issuer, issued on receipt of funds for the purpose of making payment transactions), it would be subject to that regulation. The Bank of Albania would supervise this.
     • Securities: If a stablecoin's features grant rights akin to securities (e.g., profit sharing, equity ownership), it could be deemed a security under Law No. 9879/2008, overseen by the AMF.
   • Current Stance: The Bank of Albania has consistently stated that virtual currencies are not legal tender in Albania and are not regulated by it under the traditional banking framework, unless they perform functions typically attributed to e-money or payment services. The AMF, under Law 110/2020, would regulate the issuance and related services of stablecoins as a virtual asset.

2. Reserve Requirements:

   • Law No. 110/2020 does not specify explicit 1:1 reserve requirements for stablecoins themselves in the manner seen in the EU's MiCA regulation.
   • However, operators licensed under this law (which would include stablecoin issuers) are required to maintain adequate capital, robust internal controls, and sound risk management systems. The AMF assesses the financial soundness and operational capabilities of the licensed entities.
   • If a stablecoin were to be classified as e-money, then the strict reserve requirements of Law No. 9918/2008 would apply: e-money issuers must safeguard funds received in exchange for e-money in a segregated account with a credit institution or invest them in secure, low-risk assets.

3. Issuer Licensing:

   • Mandatory. This is a cornerstone of Law No. 110/2020. Any entity wishing to issue virtual assets (including stablecoins) or provide related services (such as operating an exchange, custody, or advisory services for virtual assets) must obtain a license from the AMF.
   • The licensing process is comprehensive, involving:
     • Capital requirements: Based on the type of service.
     • Fit and proper tests: For management and shareholders.
     • Robust governance and internal control arrangements.
     • Operational safeguards: To ensure business continuity and cybersecurity.
     • AML/CFT compliance: Strict adherence to anti-money laundering and combating the financing of terrorism requirements, including customer due diligence (KYC).

4. Redemption Rights:

   • Law No. 110/2020 does not explicitly detail redemption rights for stablecoins. However, a licensed stablecoin issuer would be bound by the terms and conditions of its issuance, which would be part of the AMF's review during the licensing process.
   • For a stablecoin potentially classified as e-money, Law No. 9918/2008 grants clear redemption rights: e-money holders have the right to redeem the monetary value of their e-money at par at any time.

5. Algorithmic Stablecoin Rules:

   • Law No. 110/2020 does not specifically differentiate between collateralized stablecoins and algorithmic stablecoins. The focus is on the operator and the service provided.
   • An issuer of an algorithmic stablecoin would still need to obtain a license from the AMF. During the licensing process, the AMF would assess the stability mechanism, underlying technology, and inherent risks of such a model. It is likely that algorithmic stablecoins would face intense scrutiny regarding their financial stability, operational resilience, and risk disclosures due to their inherent complexities and past failures in the market. There are no specific prohibitions against them, but they must meet general prudential and consumer protection requirements.

6. CBDC Interaction:

   • The Bank of Albania, like many central banks globally, is actively exploring the concept and potential implications of a Central Bank Digital Currency (CBDC).
   • This exploration is distinct from the regulation of private stablecoins. A CBDC would be a liability of the central bank, carry sovereign backing, and likely be legal tender, aiming to complement physical cash and existing payment systems.
   • While a CBDC could potentially impact the demand for and role of private stablecoins in the future, the current regulatory framework for privately issued stablecoins operates independently. There's no specific framework interaction between a future Albanian CBDC and existing stablecoins.

Legislation and Regulatory References with URLs:

• Law No. 110/2020 "On Financial Markets Based on Distributed Ledger Technology":

  • The official text is in Albanian. You can typically find it on the official website of the Albanian Parliament (Kuvendi i Shqipërisë) or via the AMF.
  • AMF Website (often publishes summaries or relevant information): https://amf.gov.al/ (Navigate to "Legislacion" or "Kuadri Ligjor")
  • A direct link to the law text often requires searching the official legislative database (e.g., Fletorja Zyrtare). A search on Fletorja Zyrtare for "Ligji 110/2020" would be necessary. Example for accessing official acts (though direct linking might be unstable): https://qbz.gov.al/
  • Note: Finding a reliable, official English translation directly on a government site is challenging for Albanian law. Professional translations are usually required.

• Law No. 9918/2008 "On Payment Services" (as amended):

  • Bank of Albania (Banka e Shqipërisë) is the primary source for payment system regulations.
  • Bank of Albania (Laws and Regulations): https://www.bankofalbania.org/ (Navigate to "Legal Framework" -> "Payment System")

• Law No. 9879/2008 "On Securities" (as amended):

  • AMF Website: https://amf.gov.al/ (Navigate to "Legislacion" or "Kuadri Ligjor")

• Law No. 157/2014 "On the Prevention of Money Laundering and Terrorism Financing" (as amended):

  • General Directorate for the Prevention of Money Laundering (Drejtoria e Përgjithshme e Parandalimit të Pastrimit të Parave): https://www.dppp.gov.al/ (Look under "Legislacioni" for the relevant laws)

• Bank of Albania Statements/Warnings on Virtual Assets:

  • Regularly check the "News and Publications" section on the Bank of Albania website for official statements and warnings.
  • Example section: https://www.bankofalbania.org/News/ (Search for keywords like "cryptocurrency" or "virtual assets")

In conclusion, Albania has opted for a proactive and comprehensive DLT-specific legal framework under Law No. 110/2020, focusing on the licensing and supervision of operators. While this law doesn't explicitly categorize stablecoins in the same way as MiCA, the AMF would regulate their issuance and related services, demanding robust financial and operational standards. Stablecoins may also be subject to existing e-money or securities laws depending on their specific characteristics, bringing the Bank of Albania or further AMF oversight into play.