Armenia’s Central Bank considers transactions with cryptocurrencies risky for a number of reasons

YEREVAN, MAY 7, ARMENPRESS. The Central Bank of Armenia (CBA) released a statement on cryptocurrencies (for instance, bitcoin, ethereum), stating that regardless of type, prevalence and other characteristics, the transactions with them are highly risky, the CBA told Armenpress.

“The CBA said they closely follow the developments, analyze the international experience and research in cryptocurrency field. According to the CBA, these transactions are risky as cryptocurrencies are deprived of security and strictly unstable, there are no legally responsible subjects in most of the plans with the use of cryptocurrencies. Moreover, the transactions with cryptocurrencies can sometimes become as part of money laundering and terrorist funding plans, and their return is impossible to ensure. Another reason is that in cases of fraud or distortion of information security, there are no legal mechanisms to ensure protection of legal interests of consumers and compensate for their losses, as a result of which the consumer interests can be violated.

Cryptocurrencies may seem attractive at the first glance, but taking into account the fact that in this case the public interests are not protected at all, people, by making investments in cryptocurencies or transactions with them, may face significant financial losses or lose their investment completely due to high fluctuation of cryptocurrency price, hacker attacks and presence of other risks.

Several leading international organizations, such as the International Monetary Fund (IMF), the World Bank, as well as other structures regulating the financial sector also expressed their stance on cryptocurrencies and made several warnings according to which cryptocurrencies were considered as cryptoassets as they do not have all features to be listed among the currencies and to be used as a payment measure, and their use starting from a certain period can also affect the financial stability.

The recent statement adopted at the G-20 summit in Argentina on cryptocurrencies is also worth mentioning. The summit participants welcomed the technological innovations, but mentioned several problems in connection with the use of cryptoassets, such as protection of rights and interests of customers and investors, money laundering, terrorism funding. The G-20 called on the international criteria developing organizations to continue monitoring the cryptoassets and risks linked with them within their jurisdictions aimed at giving a proper reaction in case of necessity.

Armenia’s Central Bank remains committed to the stance over cryptoassets which is in line with the approaches of the aforementioned leading financial structures.

Based on this the CBA warns about significant risks and urges the public, including the economic entities, to refrain from exchange, sale/purchase of cryptoassets, accepting payments with cryptoassets, making investments with cryptoassets or implementing other transactions.

The aforementioned doesn’t refer to creation and extraction of cryptoassets – the mining, which is out of the CBA’s regulation and control powers and is being viewed as an industry of information technologies”, the CBA said in a statement.

English –translator/editor: Aneta Harutyunyan