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Armenia

Retail_Trading_Status

Allowed-Unregulated Unknown
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Analysis ID
#71
Version
Archived
Created
2025-04-12 06:43
Workflow Stage
Live

Executive Summary

Retail cryptocurrency trading is currently allowed but unregulated in Armenia, although this is actively transitioning towards regulation. The Central Bank of Armenia (CBA) has historically been cautious, issuing warnings about crypto risks. A draft law 'On Crypto-Assets,' modeled after the EU's MiCA, is under consideration, which includes AML/CFT requirements and licensing for CASPs/VASPs. The government has approved the draft law, moving towards a regulated environment.

Key Pillars

  • The Central Bank of Armenia (CBA) is designated as the primary regulator and supervisor of the crypto market.
  • Core compliance requirements for licensed Crypto Asset Service Providers (CASPs) / Virtual Asset Service Providers (VASPs) will include full adherence to Armenia's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework.
  • Licensing requirements for CASPs/VASPs will be introduced, mandating registration with the Central Bank to obtain authorization to operate.

Landmark Laws

  • Draft Law 'On Crypto-Assets': Introduced by the Central Bank of Armenia (CBA). Aims to regulate the crypto market comprehensively, defining crypto-assets, establishing rules for public offerings, specifying permissible crypto-asset services, designating the CBA as the regulator and supervisor, and introducing licensing requirements for CASPs/VASPs. Approved by the Armenian government in February 2025.
  • Amendments to the Tax Code: Part of the legislative package, aiming to establish taxation mechanisms for crypto-assets, although specific rates and bases were still under discussion as of early 2025.

Considerations

  • Crypto assets lack a defined legal classification under current regulations, contributing to uncertainty regarding their tax treatment.
  • The Central Bank of Armenia has warned about the risks associated with cryptocurrencies, including volatility, lack of security, and potential for illicit use.
  • Taxation mechanisms for crypto-assets are under development as part of the legislative package but specific rates and bases are still under discussion. The State Revenue Committee (SRC) is acquiring Chainalysis software to monitor crypto transactions for tax compliance.

Notes

  • Historically, the Central Bank of Armenia (CBA) issued warnings about the risks of cryptocurrencies, starting in May 2018.
  • The draft law 'On Crypto-Assets' is modeled after the European Union's Markets in Crypto-Assets (MiCA) regulation.
  • The State Revenue Committee (SRC) is acquiring Chainalysis software to monitor crypto transactions for tax compliance and illicit activity detection.
  • The report reflects the regulatory status based on information available up to April 12, 2025, with the disclaimer that the regulatory landscape is rapidly evolving and final implementation details may vary.

Detailed Explanation

As of April 12, 2025, Armenia's retail cryptocurrency trading status is 'Allowed-UnRegulated' but actively transitioning towards a regulated environment. Currently, there is no specific law explicitly prohibiting citizens and residents from buying, selling, or holding cryptocurrencies. However, the Central Bank of Armenia (CBA) has historically maintained a cautious stance, issuing a warning in May 2018 about the significant risks associated with crypto-assets, citing volatility, lack of security, absence of legally responsible entities, and potential for illicit use in money laundering and terrorism financing, encouraging the public to refrain from such activities. Despite the CBA's warnings and the absence of specific regulations, crypto activities like P2P trading and the use of international exchanges have been possible. Banks have generally not systematically blocked crypto-related transactions, and non-entrepreneur individuals have been exempt from capital gains tax on crypto asset transactions. However, uncertainty exists regarding the overall tax treatment. A significant shift is underway as the Armenian government and the CBA recognize the need for a formal framework. The CBA has developed a draft law, 'On Crypto-Assets,' modeled after the European Union's Markets in Crypto-Assets (MiCA) regulation. The draft law defines crypto-assets, establishes rules for public offerings (requiring registration and prospectuses), specifies permissible crypto-asset services (custody, exchange, brokerage), designates the CBA as the regulator and supervisor, and introduces licensing requirements for Crypto Asset Service Providers (CASPs) / Virtual Asset Service Providers (VASPs). In February 2025, the Armenian government approved the draft law 'On Cryptoassets' and related legislative amendments, marking a crucial step towards regulation. The draft regulations require licensed CASPs/VASPs to comply with Armenia's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, aligning with international standards from the Financial Action Task Force (FATF). Workshops and training involving the Financial Monitoring Center (Armenia's FIU), prosecutors, and financial institutions have been conducted to bolster capacity in supervising VASPs and mitigating ML/TF risks. Amendments to the Tax Code are also part of the legislative package, aiming to establish taxation mechanisms for crypto-assets, although specific rates and bases were still under discussion as of early 2025. The State Revenue Committee (SRC) is acquiring Chainalysis software to monitor crypto transactions for tax compliance and illicit activity detection. While the draft law needs to pass through parliament, the status remains 'Allowed-UnRegulated' with a clear trajectory toward becoming 'Allowed-Regulated.' Individuals can still trade, but service providers will soon face licensing and AML/KYC obligations under CBA supervision. The regulatory landscape is rapidly evolving, and the final implementation details of the new law may vary.

Summary Points

Okay, here's the converted regulatory analysis report in a clear, bullet-point format:

Retail Cryptocurrency Trading Status in Armenia (as of April 12, 2025)

I. Current Regulatory Status:

  • Allowed-UnRegulated (Transitioning to Regulated): Retail cryptocurrency trading (buying, selling, and holding) is currently permitted but largely unregulated. This is actively changing with new legislation.

II. Key Regulatory Bodies:

  • Central Bank of Armenia (CBA):
    • Role: Primary regulator and supervisor of the crypto market under the new draft law.
    • Responsibilities: Licensing of Crypto Asset Service Providers (CASPs) / Virtual Asset Service Providers (VASPs).
    • Past Actions: Issued warnings in 2018 about the risks of cryptocurrency trading.
  • Armenian Government:
    • Role: Approved the draft law "On Crypto-Assets" in February 2025.
  • Financial Monitoring Center (Armenia's FIU):
    • Role: Involved in AML/CFT supervision of VASPs.
  • State Revenue Committee (SRC):
    • Role: Responsible for tax compliance and illicit activity detection related to crypto transactions.
    • Actions: Acquiring software (Chainalysis) to monitor crypto transactions.

III. Key Legislation and Regulations:

  • Draft Law "On Crypto-Assets":
    • Status: Approved by the government in February 2025; awaiting parliamentary approval.
    • Purpose: To comprehensively regulate the crypto market in Armenia.
    • Model: Based on the European Union's Markets in Crypto-Assets (MiCA) regulation.
    • Key Provisions:
      • Defines crypto-assets.
      • Establishes rules for public offerings (registration, prospectuses).
      • Specifies permissible crypto-asset services (custody, exchange, brokerage).
      • Introduces licensing requirements for CASPs/VASPs.
      • Designates the CBA as the regulator and supervisor.
  • Amendments to the Tax Code:
    • Status: Part of the legislative package with the draft law "On Crypto-Assets."
    • Purpose: To establish taxation mechanisms for crypto-assets.
    • Details: Specific rates and bases were still under discussion as of early 2025.

IV. Requirements for Compliance (Upon Enactment of the Draft Law):

  • Licensing: CASPs/VASPs will need to obtain a license from the CBA to operate.
  • Registration: Cryptoasset providers and exchanges must register with the Central Bank to obtain authorization to operate.
  • AML/CFT Compliance: Licensed CASPs/VASPs must fully comply with Armenia's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework.
  • KYC Obligations: Expected as part of AML/CFT compliance.
  • Tax Compliance: Compliance with new taxation mechanisms for crypto-assets, once defined.

V. Notable Restrictions or Limitations:

  • Pre-Draft Law:
    • CBA Warnings: The CBA has previously warned about the risks of cryptocurrency trading.
    • Lack of Specific Regulation: Uncertainty regarding the overall tax treatment of crypto assets.
  • Post-Draft Law (Expected):
    • Licensing Requirements: Service providers will need to obtain licenses.
    • AML/KYC Obligations: Increased scrutiny and compliance requirements for service providers.
    • CBA Supervision: The market will operate under the supervision of the CBA.

VI. Recent Developments or Changes:

  • February 2025: The Armenian government approved the draft law "On Crypto-Assets."
  • Ongoing: Development of taxation mechanisms for crypto-assets.
  • Ongoing: Capacity building for supervising VASPs and mitigating ML/TF risks.

VII. Important Considerations:

  • Timeline: The draft law still needs to pass through parliament and be implemented (potentially later in 2025 or beyond).
  • Transitional Status: The market is currently in a transitional phase, moving from unregulated to regulated.
  • International Standards: Armenia is committed to adopting international standards, such as those from the Financial Action Task Force (FATF), including the Crypto-Asset Reporting Framework (CARF).

VIII. Source Links:

Disclaimer: This report reflects the regulatory status based on information available up to April 12, 2025. The regulatory landscape for cryptocurrencies is rapidly evolving, and the final implementation details of the new Armenian law may vary.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Armenia

Date: April 12, 2025

Topic: Retail_Trading_Status

Description: Assessment of the legal permissibility for individual citizens and residents in Armenia to buy, sell, and hold cryptocurrencies, including the regulatory environment surrounding this activity (e.g., KYC/AML requirements, official warnings).

1. Current Status: Allowed-UnRegulated (Transitioning towards Regulated)

2. Narrative Explanation:

Currently, individual citizens and residents in Armenia are generally permitted to buy, sell, and hold cryptocurrencies. There is no specific law explicitly prohibiting these activities for retail participants. However, the market operates largely outside a dedicated, comprehensive regulatory framework, placing it in an "Allowed-UnRegulated" state. This status is actively transitioning as significant regulatory developments are underway.

Historically, the Central Bank of Armenia (CBA) has maintained a cautious stance. In May 2018, the CBA issued a statement warning the public about the significant risks associated with cryptocurrencies, citing their volatility, lack of security, absence of legally responsible entities in many schemes, and potential use in illicit activities like money laundering and terrorism financing. The CBA explicitly encouraged the public and economic agents to refrain from trading, exchanging, or investing in crypto-assets, though it noted that crypto mining fell outside its regulatory scope at the time, viewing it as an IT activity.

Despite these warnings and the lack of specific regulation, crypto activities, including peer-to-peer (P2P) trading and usage of international exchanges, have been possible in Armenia. Banks have generally not systematically blocked transactions related to crypto, although large-scale operations might attract scrutiny. Non-entrepreneur individuals have also been exempt from capital gains tax on crypto asset transactions under the existing tax code, though uncertainty exists regarding the overall tax treatment.

The regulatory landscape is now undergoing a significant shift. The Armenian government and the Central Bank have recognized the need for a formal framework to address the risks and provide clarity.
* Draft Law "On Crypto-Assets": The CBA has developed and introduced a draft law "On Crypto-Assets". This draft law, modeled after the European Union's Markets in Crypto-Assets (MiCA) regulation, aims to regulate the crypto market comprehensively. It defines crypto-assets, establishes rules for public offerings (requiring registration and detailed prospectuses), specifies permissible crypto-asset services (like custody, exchange, brokerage), designates the CBA as the regulator and supervisor, and introduces licensing requirements for Crypto Asset Service Providers (CASPs) / Virtual Asset Service Providers (VASPs).
* Government Approval: In February 2025, the Armenian government approved the draft law "On Cryptoassets" and related legislative amendments. This marks a crucial step towards establishing a regulated environment.
* AML/CFT Integration: The draft regulations explicitly require licensed CASPs/VASPs to fully comply with Armenia's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework. This aligns with international standards, such as those from the Financial Action Task Force (FATF), which Armenia is committed to adopting (including the Crypto-Asset Reporting Framework - CARF). Workshops and training involving the Financial Monitoring Center (Armenia's FIU), prosecutors, and financial institutions have been conducted to bolster capacity in supervising VASPs and mitigating ML/TF risks associated with virtual assets.
* Taxation: Amendments to the Tax Code are also part of the legislative package, aiming to establish taxation mechanisms for crypto-assets, although specific rates and bases were still under discussion as of early 2025. The State Revenue Committee (SRC) is also acquiring software (Chainalysis) to monitor crypto transactions for tax compliance and illicit activity detection.

While the draft law has been approved by the government, it still needs to pass through parliament. Until the law is fully enacted and implemented (potentially later in 2025 or beyond), the status remains technically "Allowed-UnRegulated," but with the clear trajectory towards becoming "Allowed-Regulated." Individuals can still trade, but service providers will soon face licensing and AML/KYC obligations, and the overall market will operate under CBA supervision.

3. Relevant Excerpts and Summaries:

  • On Current Lack of Specific Regulation (Pre-Draft Law):

    • "Currently, Armenia does not have a well-defined legal framework for cryptocurrencies... While there is no direct legislation supporting crypto activities, there are also no severe restrictions, allowing entrepreneurs to engage in crypto transactions within a legal gray area." (Source: Documan, March 2025)
    • "Unfortunately, at this moment, Armenia completely lacks a dedicated law regulating the cryptoassets and cryptocurrency sector." (Source: SCHNEIDER GROUP, Jan 2025)
    • "...there is uncertainty as to the appropriate tax treatment... This uncertainty is further amplified by the lack of financial regulations for the crypto asset sector in Armenia." (Source: IMF, Nov 2023)

  • On CBA Warnings:

    • "In view of what has been stated above, the Central Bank of Armenia warns about significant risks and encourages the people, including economic agents, to refrain from such practices as an exchange and/or trading of crypto-assets, payment with cryptocurrencies, investment in cryptocurrencies or other similar transactions." (Source: Central Bank of Armenia, May 2018)
    • "The Central Bank of Armenia has been monitoring the virtual assets market since 2018, when it first warned the public about the risks of cryptocurrency transactions." (Source: BMG, Dec 2024)

  • On the New Draft Law and Impending Regulation:

    • "The Central Bank of Armenia has proposed a new draft law titled "On Cryptoassets." The purpose of this legislation is to regulate the cryptoassets market, protect consumer rights, and mitigate systemic risks... The Central Bank assumes the role of regulator and supervisor... Cryptoasset providers and exchanges must register with the Central Bank to obtain authorization to operate." (Source: Crowe & Asatryans LLC, July 2024)
    • "The Central Bank of Armenia is finalizing a draft law to regulate the cryptocurrency market following the European MiCA (Markets in Crypto-Assets) model. This legislation aims to legalize digital asset operations through the country's banking system..." (Source: BMG / Cryptocurrency Regulation Tracker, Dec 2024)
    • "At a meeting on Thursday [Feb 27, 2025], the Armenian government approved the law 'On Cryptoassets,' aimed at introducing regulations in the areas of cryptocurrency circulation, exchange, and service provision." (Source: Arka.am / bne IntelliNews, Feb 2025)
    • "The CBA draft regulations also contain provisions requiring licensed crypto asset service providers to apply in full the RoA's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework." (Source: IMF, Nov 2023)
    • "The draft law also includes a package of amendments to related laws, including the Armenian Tax Code, which foresees the establishment of taxation mechanisms for –assets." (Source: MB Legal, Feb 2025)

4. Source Links:

Disclaimer: This report reflects the regulatory status based on information available up to April 12, 2025. The regulatory landscape for cryptocurrencies is rapidly evolving, and the final implementation details of the new Armenian law may vary.

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