Armenia -- Custody Regulations Regulatory Overview

Armenia's regulatory framework for cryptocurrency and digital asset custody is nascent and largely undeveloped, particularly concerning specific, detailed custody requirements like those found in more mature crypto regulatory jurisdictions (e.g., the US, EU). The Central Bank of Armenia (CBA) generally maintains a cautious stance on cryptocurrencies.

Here's a breakdown based on the current understanding:

Overall Regulatory Stance

The Central Bank of Armenia (CBA) has issued warnings regarding the risks associated with cryptocurrencies, stating that they are not legal tender in Armenia and are not regulated by the CBA. This cautious approach means that a comprehensive, dedicated legal framework for digital asset custody has not yet been established.

1. Custodial License Requirements

• No specific "crypto custody license" exists. Armenia does not currently have a dedicated licensing regime for cryptocurrency custodians.
• AML/CFT Implications: While there's no specific custody license, any entity providing services related to virtual assets that fall under the definition of a "Virtual Asset Service Provider" (VASP) is generally subject to the Law on Combating Money Laundering and Terrorism Financing. This law would require such entities to implement AML/CFT measures, report suspicious transactions, and potentially register with the relevant authorities (e.g., the Financial Monitoring Centre of the CBA). However, this does not equate to a specific custody license covering operational or security aspects of custody.

2. Segregation of Client Assets Rules

• No specific regulations. There are no specific laws or regulations in Armenia that mandate the segregation of client digital assets from the custodian's own assets.
• In traditional finance, such rules are standard to protect client funds in case of bankruptcy or mismanagement. The absence of specific crypto regulations means these protections do not explicitly extend to digital assets held by crypto service providers.

3. Insurance/Bonding Requirements

• No specific requirements. Armenia does not impose mandatory insurance or bonding requirements for cryptocurrency custodians.
• This means that clients would likely have no recourse through a regulatory-mandated insurance scheme in the event of theft, loss, or insolvency of a crypto custodian.

4. Cold Storage Mandates

• No specific mandates. There are no specific regulatory mandates or technical requirements for cryptocurrency custodians regarding the use of cold storage (offline storage) for digital assets.
• Custodians might implement cold storage as a best practice for security, but it is not a legal obligation.

5. Qualified Custodian Definitions

• No specific definition. Given the absence of a dedicated regulatory framework for digital asset custody, there is no legal definition of a "qualified custodian" for cryptocurrencies in Armenia.
• In jurisdictions with developed crypto regulations, a "qualified custodian" typically refers to an institution meeting specific capital, security, and operational standards set by regulators.

6. Pending Custody Legislation

• As of late 2023 / early 2024, there are no widely reported or publicly announced specific legislative initiatives focused solely on digital asset custody in Armenia.
• However, discussions about broader regulation of virtual assets and digital financial instruments are ongoing in many countries globally. Armenia, like others, may consider future amendments to its AML/CFT laws or introduce new legislation to regulate VASPs more comprehensively, which could eventually include custody aspects. Such developments would likely be part of a larger framework for virtual assets rather than a standalone custody law.

Specific Regulatory References and URLs

1. Central Bank of Armenia (CBA):

   • The CBA is the primary financial regulator. While they haven't issued detailed crypto regulations, their official statements and warnings represent the official stance.
   • Website: https://www.cba.am/
   • You would typically search their newsroom or "Legislation" section for any press releases or statements regarding virtual assets. As of now, statements generally express caution rather than introduce regulatory frameworks.

2. Law on Combating Money Laundering and Terrorism Financing (ՀՀ օրենքը Փողերի լվացման և ահաբեկչության ֆինանսավորման դեմ պայքարի մասին):

   • This is the most relevant piece of legislation that would potentially cover Virtual Asset Service Providers (VASPs), including those offering custody services, under its anti-money laundering and counter-terrorist financing obligations.
   • Official Legal Information System (ARLIS): https://www.arlis.am/
   • You can search for the law by its Armenian title. While it doesn't specify custody requirements, it's the primary legal instrument that would impose obligations on crypto-related businesses. An official English translation is not readily available through a direct government link, but the spirit of the law aligns with FATF recommendations for VASPs.

Disclaimer: The regulatory landscape for cryptocurrencies is highly dynamic. This information is based on current public knowledge and should not be considered legal advice. Entities operating or planning to operate in Armenia should consult with local legal experts specializing in financial and technology law.