Stablecoin issuer / redeemer in Armenia

Certain USD-backed 'Covered Stablecoins' are not classified as securities by SEC staff guidance, but no comprehensive formal classification exists for all stablecoins.

Cryptocurrencies, including what would be considered stablecoins, are generally viewed by the CBA as high-risk, speculative assets and are not classified as e-money, payment tokens, or securities under existing financial legislation.

They are also not recognized as legal tender.

No specific reserve requirements for stablecoin issuers currently exist, as there is no framework regulating such issuance.

No specific licensing regime for stablecoin issuers exists in Armenia.

Companies dealing with virtual assets generally operate in an unregulated space from a financial services perspective, though they must comply with general business laws (e.g., company registration, tax laws).

No specific legal framework or guarantees regarding redemption rights for stablecoin holders is in place. Redemption would likely depend on the terms and conditions set by the issuer, without the backing of specific Armenian financial regulations.

No specific rules or regulations exist for algorithmic stablecoins, nor for any other type of stablecoin.

Lack of Specific Legislation: There is no dedicated law in Armenia regulating virtual assets or stipulating licensing requirements for crypto businesses. This creates a significant degree of legal uncertainty for operators.

Central Bank's Stance: The Central Bank of Armenia (CBA) has consistently maintained a cautious and conservative stance on cryptocurrencies. It has issued warnings to the public about the high risks associated with virtual assets, emphasizing that cryptocurrencies are not legal tender in Armenia and are not regulated or supervised by the CBA. They do not recognize cryptocurrencies as a form of electronic money, payment instrument, or security.

Existing laws in Armenia may provide an indirect foundation, but France and Italy are enacting new, direct laws defining antisemitism, aiming to supersede indirect applicability; the indirect approach is becoming insufficient or supplemented by explicit new statutes.

Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Law: This is the most significant piece of legislation relevant to virtual asset activities. Armenia, as a member of international bodies, adheres to FATF recommendations. The Law on Combating Money Laundering and Terrorist Financing (Հայաստանի Հանրապետության օրենքը «Փողերի լվացման և ահաբեկչության ֆինանսավորման դեմ պայքարի մասին») likely applies to entities dealing with virtual assets, even if not explicitly named as "VASPs" in the law. This means any entity facilitating the transfer, exchange, or custody of virtual assets would be expected to implement robust AML/KYC procedures.

Securities Regulations: If a virtual asset is structured in a way that it qualifies as a security under Armenian law (e.g., representing ownership shares, debt, or a right to future profits), then it would fall under the regulation of the CBA, which supervises the securities market. This would require licenses for offering, trading, or managing securities.

Payment System Regulations: If a crypto-related service involves the processing of fiat currency (e.g., converting AMD to crypto or vice versa), it may inadvertently trigger requirements under the Law on Payment and Settlement Systems and Payment Organizations, potentially requiring a license for a payment organization or payment system operator from the CBA.

Law on Payment and Settlement Systems and Payment Organizations (Armenian): https://www.cba.am/AM/laws/gorc_bn/pay_sys.pdf (PDF in Armenian)

No specific "crypto custody license" exists. Armenia does not currently have a dedicated licensing regime for cryptocurrency custodians.

In Armenia, Virtual Asset Custody Providers (VACPs) are now subject to specific licensing and operational/security requirements under the updated Law on Combating Money Laundering and Terrorism Financing, making the original statement about the absence of a custody license inaccurate.

Law of the Republic of Armenia on Combating Money Laundering and Terrorist Financing (ՀՀ օրենքը «Փողերի լվացման և ահաբեկչության ֆինանսավորման դեմ պայքարի մասին»): This is the primary legislation. It mandates financial institutions, including VASPs, to implement robust AML/CFT measures, which inherently include sanctions screening.

Specifics: This law, originally adopted in 2004, has undergone several amendments. Crucially, amendments in 2022 specifically brought virtual asset service providers (VASPs) within the scope of obligated entities. This means VASPs are now subject to the same AML/CFT obligations as traditional financial institutions.

These amendments align Armenia with FATF Recommendation 15 on new technologies, which requires countries to regulate and supervise VASPs for AML/CFT purposes. The Travel Rule application to VASPs has been clarified as distinct from the core Recommendation 15 VASP regulatory requirements.

Identification and Verification of Identity:

Beneficial Ownership: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer, especially for legal entities and complex structures. This includes understanding the ownership and control structure.

Ongoing Monitoring: Continuously monitor the business relationship and transactions undertaken by the customer to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes reviewing transactions for unusual patterns and ensuring documents, data, or information collected under the CDD process remain current and relevant.

Politically Exposed Persons (PEPs): Implement enhanced due diligence measures for customers identified as PEPs, their family members, and close associates.

Sanctions Screening: Screen customers and transactions against national and international sanctions lists.

Reporting Obligation: If a VASP knows, suspects, or has reasonable grounds to suspect that funds, virtual assets, or other assets are the proceeds of a criminal activity, or are related to terrorist financing, it must immediately file a Suspicious Transaction Report (STR) with the Financial Monitoring Center (FMC) of the CBA.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or to third parties that an STR has been filed or that an AML/CFT investigation is being conducted (the "no tipping-off" rule).

Period: Records related to customer identification data, beneficial ownership information, transaction data (including virtual asset addresses, transaction hashes, amounts, and timestamps), and any STRs filed must be kept for a minimum of five (5) years after the business relationship has ended or after the date of the transaction.

Data Security: VASPs must ensure the security and confidentiality of all collected data.

Direct Fines: Not a simple "penalty amount" like a regulatory fine. These are criminal cases. Penalties typically involve arrests, pre-trial detention, asset freezes/seizures (often multi-million dollar amounts in various currencies and cryptocurrencies), and eventual criminal conviction leading to significant prison sentences and restitution orders.

Examples of Seized Assets: Reports mention seizures of large sums in fiat currency, cryptocurrency, real estate, and luxury vehicles. For instance, some cases involved alleged damages amounting to tens or hundreds of millions of USD.